Karachi, September 25, 2024 – The Federal Board of Revenue (FBR) has issued updated guidelines for individuals and entities who have either failed to file their annual income tax returns or submitted them after the due date.
These new guidelines aim to clarify the rules governing such cases and emphasize the legal consequences for non-filers and late filers under Pakistan’s tax laws.
In its official statement, the FBR highlighted that these provisions pertain to the appearance of individuals on the Active Taxpayers List (ATL), which is a critical factor in determining tax liabilities and eligibility for certain benefits. The rules are governed by Section 100BA of the Income Tax Ordinance, 2001, which specifically addresses the treatment of non-filers and those who file returns late.
Key Provisions Under Section 100BA:
According to Section 100BA of the Income Tax Ordinance, 2001:
1. Advance Income Tax and Tax Computation:
The collection or deduction of advance income tax, as well as the computation of taxable income and the tax payable, for persons not listed on the ATL, or for those who appear on the ATL but have not filed their returns by the specified deadline, will be governed by the rules laid out in the Tenth Schedule of the Income Tax Ordinance.
2. Tenth Schedule Overrides Conflicting Provisions:
The FBR also made it clear that the provisions of the Tenth Schedule take precedence over any other sections or rules in the Income Tax Ordinance that may conflict with them. This means that even if there are other provisions elsewhere in the Ordinance, the Tenth Schedule will still apply to non-filers and late filers.
Active Taxpayers List (ATL):
The ATL is a crucial element in Pakistan’s tax administration system. Individuals and businesses on this list enjoy various benefits, including lower withholding tax rates on financial transactions, investments, and other activities. Failure to appear on the ATL can lead to higher tax deductions, financial penalties, and other consequences.
Implications for Non-Filers and Late Filers:
For those who do not file their tax returns by the due date or fail to file them at all, the consequences are severe. Non-filers are subjected to higher withholding taxes on various transactions, such as banking, property purchases, and vehicle registrations. Additionally, they may face further legal action from the FBR if they do not comply with the tax regulations.
The FBR has emphasized the importance of timely tax filing to avoid penalties and legal complications. Non-filers and late filers are encouraged to rectify their tax status by submitting their returns and ensuring compliance with the applicable laws.
The updated guidelines serve as a reminder for taxpayers to adhere to the deadlines set forth under Section 118 of the Income Tax Ordinance and its related provisions. Taxpayers are also urged to consult the Tenth Schedule for detailed rules regarding late and non-filers.
