Non-filing penalty of each day default implements

Non-filing penalty of each day default implements

ISLAMABAD: A penalty of Rs1,000 each day of default has been implemented from Saturday after the expiry of return filing date on October 15, 2021.

A new amendment has been made part to the Income Tax Ordinance, 2001 through Tax Laws (Third Amendment) Ordinance, 2021. The Federal Board of Revenue (FBR) issued Circular No. 07 of 2021-2022 to explain the amendment.

The last date for filing the income tax return for tax year 2021 was September 30, 2021. However, the FBR through a circular extended the date by 15 days up to October 15, 2021.

The FBR said that amendment has been made in Section 182 of the Income Tax Ordinance, 2001.

“A person who fails to file return within due date will have to pay a penalty of higher of Rs1,000 or 0.1 per cent of tax payable for each day of default. However, the minimum penalty shall be Rs10,000 in case of individual having 75 per cent or more income from salary and Rs50,000 in other case and maximum penalty shall not exceed 200 per cent of tax payable by person.

“Furthermore, above mentioned penalties shall also be reduced by 75 per cent, 50 per cent and 25 per cent in case return is filed by the person within one, two or three months respectively after the due date.

“General penalty for contravening any provisions of the ordinance has been omitted,” the FBR added.

The FBR also introduced other penal action of suspending mobile phones and utility connections for not appearing on Active Taxpayers List (ATL).

The FBR said that broadening of the tax base is the highest priority of the tax authorities and paramount to increase the revenue.

“To  augment the existing measures to broaden the tax net and to increase the number of return filers, a new section 114B has been inserted which empowers the FBR to issue Income Tax General Order (ITGO) in respect of persons who are not appearing on ATL but are liable to file return under the provisions of the Income Tax Ordinance, 2001.”

The FBR has also been empowered to discontinue the use of mobile phone connections, electricity connections and gas connections of the non-filers.

The FBR or the concerned commissioners are also empowered to issue orders to restore the discontinued connections in cases where the return has been filed or the person was not required to file return of income.

Before inclusion of any person in the general order, following conditions are required to be met:

(i) Notice under sub-section 4 of Section 114 has been issued;

(ii) Date of compliance of the notice under sub-section (4) of section 114 has lapsed; and

(iii) Tax return has not been filed.

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