Islamabad, June 12, 2024 – The Federal Board of Revenue (FBR) has announced new tax rates for late income tax return filers as part of the Finance Bill 2024.
This measure, unveiled in the 2024-25 budget on Wednesday, aims to encourage timely tax compliance and address issues related to late filing.
Currently, non-filers are subjected to significantly higher tax rates as a deterrent, making the cost of doing business more expensive and incentivizing them to file their returns. The government uses this strategy to increase compliance and broaden the tax base.
New Tax Measures for Late Filers
The FBR has introduced a new tax rate category specifically for individuals who file their tax returns after the due date, primarily to avoid the higher rates imposed on non-filers. This new category of “late filers” will face tax rates higher than regular filers but lower than non-filers.
Details of the New Tax Rates
Under the new system, the FBR aims to balance the penalty for late filing with an incentive to encourage timely compliance. While exact rates have yet to be disclosed, the FBR emphasized that the new rates for late filers will be structured to significantly incentivize early and on-time filing of tax returns.
Objective and Impact
The introduction of these new tax rates is part of a broader strategy to improve tax compliance and ensure a more equitable tax system. By differentiating between regular filers, late filers, and non-filers, the FBR hopes to:
Encourage Timely Filing: The tiered tax rates serve as a financial incentive for taxpayers to file on time, thus avoiding the higher rates applicable to non-filers and late filers.
Increase Revenue: By imposing higher rates on those who delay filing, the FBR aims to enhance revenue collection.
Broaden Tax Base: The measures are expected to bring more taxpayers into the formal economy, improving overall tax compliance.
The new tax rates for late filers reflect the FBR’s commitment to strengthening the tax system and promoting timely tax compliance. These changes, part of the Finance Bill 2024, underscore the government’s ongoing efforts to improve fiscal discipline and enhance revenue generation through more effective tax administration. Taxpayers are encouraged to file their returns promptly to benefit from the lower rates and avoid penalties.