Karachi, July 31, 2024 – The Federal Board of Revenue (FBR) has announced a significant exemption for individuals holding a National Identity Card for Overseas Pakistanis (NICOP) from penalties imposed for non-filing of income tax returns.
The FBR clarified that the Finance Act of 2024 introduced new restrictions on individuals who fail to file their income tax returns despite being listed in the income tax general order. According to the FBR, when a person fails to file a return even after receiving a notice under sub-section (4) of Section 114 of the Income Tax Ordinance, 2001, the FBR has the authority to issue an income tax general order against them.
Before the implementation of the Finance Act, 2024, those issued with an income tax general order faced penalties such as the disabling of their mobile phones or SIM cards and the discontinuation of their electricity or gas connections. However, the new act introduces an additional penalty: restrictions on foreign travel from Pakistan for those who remain non-compliant after receiving a notice to file their returns.
In a move to provide relief to certain groups, the FBR has specified that this travel restriction will not apply to several categories of individuals. Exemptions include:
• Citizens holding a NICOP
• Minors
• Students
• Individuals traveling abroad for Hajj or Umrah
• Other specific classes of persons as notified by the FBR
The FBR’s decision to exempt NICOP holders acknowledges the unique circumstances of overseas Pakistanis, who may face challenges in complying with domestic tax filing requirements due to their international locations and commitments. By providing this exemption, the FBR aims to balance the enforcement of tax compliance with the practical realities faced by overseas citizens.
The new policy underlines the FBR’s commitment to broadening the tax base and ensuring that all eligible taxpayers fulfill their obligations. However, it also demonstrates flexibility and consideration for the Pakistani diaspora, which plays a vital role in the country’s economy through remittances and investments.
The exemption for overseas Pakistanis and other specified groups reflects an effort to make tax regulations more inclusive and practical. It aims to alleviate undue burdens on those who contribute to the economy from abroad while maintaining a robust framework for tax compliance within the country.
Overall, the FBR’s updated regulations through the Finance Act, 2024, signify a balanced approach to enhancing tax compliance, providing necessary exemptions, and ensuring that penalties for non-compliance are fair and considerate of the diverse circumstances of all Pakistani citizens.