Karachi, November 16, 2024 – The Federal Board of Revenue (FBR) has announced a monetary penalty structure for individuals found guilty of providing misleading tax declarations to Inland Revenue authorities. The move is part of the FBR’s ongoing efforts to enhance tax compliance and curb fraudulent practices within the tax system.
Under the regulations, any person who makes a false or misleading statement to an Inland Revenue Authority—whether orally, in writing, or electronically—will face significant penalties. This includes misleading declarations in applications, certificates, notifications, returns, objections, or other documents such as books of accounts that are made, prepared, filed, or furnished under the tax laws.
According to the FBR, penalties will apply to individuals who either:
• Make a false or misleading statement in any form, including written, oral, or electronic submissions, to an Inland Revenue Authority.
• Submit false or misleading information or documents to an Income Tax Authority.
• Omit crucial information from a statement or document that makes the entire submission false or misleading in a material way.
The penalty for such violations will be the greater of either a fixed amount of twenty-five thousand rupees or 50% of the tax shortfall identified by the authorities. The FBR emphasized that this penalty is designed to deter individuals from engaging in deceptive practices that undermine the integrity of Pakistan’s tax system.
The penalty structure is part of the FBR’s comprehensive strategy to ensure that all taxpayers adhere to the correct filing and reporting procedures. However, the FBR also clarified that, in cases where a tax assessment order is deemed under Section 120 of the tax law, no penalty would be imposed on the tax shortfall if the taxpayer had taken a “reasonably arguable position” regarding the application of the tax laws to their situation.
This clarification is intended to protect taxpayers who may inadvertently make errors in their declarations but have acted in good faith, ensuring that the penalty system is fair and just.
The FBR’s move has been welcomed by many in the business community, as it aims to further solidify the authority’s commitment to tackling tax evasion and ensuring greater transparency in the country’s taxation system. The new rules also come as part of broader efforts to streamline tax compliance processes and improve the overall efficiency of the FBR.
As the FBR continues to enhance its oversight and enforcement mechanisms, it is expected that these new penalties will serve as a deterrent to fraudulent tax declarations and help boost the revenue collection system in Pakistan.
