Karachi, July 14, 2024 – The recently enacted Finance Act 2024 has introduced significant penalties for failing to file income tax returns on time. This stringent measure aims to enforce compliance and boost revenue collection.
Under the new amendment to the Income Tax Ordinance, 2001, the Finance Act 2024 outlines severe monetary penalties for individuals and entities that do not submit their income tax returns as required by sub-section (3) of Section 117 of the Income Tax Ordinance, 2001, within the specified deadline.
According to the amendment, the penalty for late filing will be the greater of:
1. 0.1% of the tax payable for the respective tax year for each day of default, or
2. Rs 1,000 per day of default.
Additionally, the Finance Act 2024 stipulates a minimum penalty threshold to ensure that even minor delays incur substantial fines. For individuals, the minimum penalty is set at Rs 10,000, while for all other cases, including businesses and corporations, the minimum penalty is Rs 50,000.
This new regulation underscores the government’s commitment to tightening tax compliance and ensuring timely submission of tax returns. The hefty penalties are designed to serve as a deterrent against late filing, encouraging taxpayers to adhere to deadlines more diligently.
The Federal Board of Revenue (FBR) has urged taxpayers to take note of these new penalties and ensure timely filing of their tax returns to avoid hefty fines. The FBR has also announced that it will launch an awareness campaign to educate taxpayers about the new penalties and the importance of timely compliance.
Tax experts have advised taxpayers to be proactive in their tax planning and return filing to avoid facing these significant penalties. They recommend early preparation and submission of tax returns to prevent any last-minute issues that could result in penalties.
The implementation of the Finance Act 2024 is part of a broader strategy by the government to enhance tax compliance, reduce evasion, and increase the tax base. By imposing these stringent penalties, the government aims to create a culture of timely tax compliance and strengthen the country’s financial position.
As the new fiscal year progresses, taxpayers are advised to stay informed about their obligations and the implications of the Finance Act 2024 to ensure they remain in compliance with the updated tax laws.