Karachi, November 10, 2024 – The Federal Board of Revenue (FBR) has announced penalties for individuals and businesses who fail to submit their income tax returns and asset declarations by the due date. These penalties are aimed at encouraging timely compliance with tax laws and apply under Section 182 of the Income Tax Ordinance, 2001.
The FBR stated that anyone who does not file their tax return as required by Section 114 within the deadline will face penalties based on how late the return is submitted.
Penalty Details
The penalties are structured to increase with each day the tax return is late. Taxpayers who miss the deadline will have to pay either:
1. 0.1% of the tax payable for that year for each day of delay, or
2. A fixed penalty of Rs. 1,000 per day for every day the return is late, whichever amount is higher.
There are also minimum and maximum limits on these penalties:
• For individuals with 75% or more of their income from a salary, the minimum penalty is set at Rs. 10,000.
• For all other cases, the minimum penalty is Rs. 50,000.
However, the FBR has set a cap on these penalties, ensuring that the total penalty does not exceed 200% of the total tax payable for the given tax year.
Reductions for Late Filing
To provide some relief, the FBR offers a reduction in penalties if the tax return is submitted within three months after the original or extended due date:
• Filing within one month after the due date results in a 75% reduction in the penalty.
• Filing within two months after the due date results in a 50% reduction.
• Filing within three months after the due date results in a 25% reduction.
Explanation of “Tax Payable”
According to the FBR, the term “tax payable” means the tax calculated on the taxpayer’s income for the year, based on the assessments under Sections 120, 121, 122, or 122D of the Income Tax Ordinance.
The FBR has introduced these penalties as a measure to improve timely tax filing and ensure compliance. Taxpayers are advised to be mindful of the filing deadlines to avoid these penalties. This step is part of the government’s efforts to strengthen tax enforcement, increase transparency, and improve revenue collection.
