ISLAMABAD: The Federal Board of Revenue (FBR) has significantly enhanced penalties for taxpayers failing to file monthly sales tax returns within the prescribed due date, introducing stricter enforcement measures through the Finance Act, 2026.

The amendments to the Sales Tax Act, 1990 increase both the fixed penalty for late filing and the daily default charge, reflecting the government’s broader strategy to improve tax compliance and strengthen revenue collection.

Fixed Penalty Raised to Rs50,000

Under the revised law, any registered person who fails to furnish a sales tax return by the due date will now be liable to pay a fixed penalty of Rs50,000, replacing the previous penalty of Rs10,000.

The fivefold increase is intended to discourage non-compliance and ensure timely submission of monthly sales tax returns by registered taxpayers.

Higher Daily Penalty for Delayed Filing

The Finance Act, 2026 has also substantially increased the daily penalty applicable where a taxpayer files the return within 10 days after the due date.

Under the previous provisions, taxpayers were required to pay Rs200 per day of default if the return was submitted within the 10-day grace period.

Following the amendment, the daily penalty has been increased tenfold to Rs2,000 per day of default for returns filed within 10 days after the statutory deadline.

Penalty Structure

Earlier provisions:

• Fixed penalty for failure to file a return by the due date: Rs10,000

• Daily penalty for filing within 10 days after the due date: Rs200 per day

Revised provisions under the Finance Act, 2026:

• Fixed penalty for failure to file a return by the due date: Rs50,000

• Daily penalty for filing within 10 days after the due date: Rs2,000 per day

Part of Broader Compliance Reforms

Tax experts say the revised penalty regime forms part of the FBR’s broader compliance and enforcement strategy aimed at improving the timely filing of sales tax returns, reducing habitual defaults, and strengthening documentation within the tax system.

The enhanced penalties are among several amendments introduced through the Finance Act, 2026 to modernize tax administration, improve enforcement mechanisms, broaden the tax base, and increase revenue collection by encouraging greater compliance with statutory filing obligations.