Individuals who assist in or encourage tax evasion face severe penalties under Pakistan’s tax laws. Specifically, a person can be sentenced to up to three years in prison for aiding, abetting, or inciting another individual to commit a tax offense. The Federal Board of Revenue (FBR) has emphasized the strict nature of punishments associated with tax evasion, concealment, and willful non-compliance as outlined in the Income Tax Ordinance of 2001.
Section 199 of the Ordinance makes it clear that any person who knowingly and willfully helps, assists, or induces another to commit a tax offense is guilty of an offense punishable by up to three years in prison or a fine, or both. This highlights the seriousness with which the law addresses evasion and related offenses.
Further, Section 192A addresses the issue of income concealment. If an individual conceals income or submits incorrect information about their income, with a resulting tax impact of five hundred thousand rupees or more, they face a potential prison sentence of up to two years, along with a fine or both. This section applies to any deliberate act of suppression of income, making false claims for deductions, or any related fraudulent activities aimed at evading taxes.
Section 193 addresses the failure to maintain required tax records. A deliberate failure to maintain records could result in a fine of up to fifty thousand rupees or imprisonment for up to two years. In other cases, a fine of up to fifty thousand rupees can be imposed.
Another critical provision, Section 194, deals with the improper use of a National Tax Number (NTN). Those who knowingly or recklessly use a false NTN on tax documents can face a fine up to fifty thousand rupees, imprisonment for up to two years, or both. This provision ensures the authenticity of taxpayer details and combats fraudulent evasion tactics.
Section 195 focuses on making false or misleading statements to tax authorities. A person who knowingly or recklessly provides incorrect information or omits critical details could face a fine or a prison sentence for up to two years. However, if the person was unaware that their statement was false or misleading, they may not be held accountable.
Sections 196 and 197 further strengthen the legal framework against tax evasion. Section 196 penalizes anyone who obstructs the tax authorities in their official duties, with a penalty of up to one year in prison or a fine. Section 197 penalizes those who dispose of property to prevent its attachment after receiving a notice from the tax commissioner, imposing a fine of up to one hundred thousand rupees or a prison sentence of up to three years, or both.
Lastly, Section 198 targets public servants who disclose confidential tax information. Unauthorized disclosure of such information can result in a fine of at least five hundred thousand rupees or imprisonment for up to one year, or both. These provisions collectively aim to deter tax evasion and ensure strict compliance with tax laws.
In number of cases, at the time of assessment, the assessing officers creates frivolous demands against the tax payer. Thus putting the assesses in unnecessary litigation which involve lot of time and money
It is suggested that if such frivolous demands are remanded back from any of the two higher forums than the assessing officers should be accounted for and discrepancy action should be initiated against him/her
This will atleast make them think twice before making assessment and create frivolous demands