Penalties for failure to file return tax year 2022 within due date

Penalties for failure to file return tax year 2022 within due date

Tax laws have prescribed penalties for failure to file return for tax year 2022 within due date. The last date for filing income tax return for tax year 2022 is September 30, 2022. The Federal Board of Revenue (FBR) recently announced it would not extend the last date beyond September 30, 2022.

Sources in the FBR said that the late filing of tax return would penal action as defined under the Income Tax Ordinance, 2001.

READ MORE: FBR fails to remove return filing glitches; KTBA seeks legal time

According to the tax laws, there are penalties where any person fails to furnish a return of income as required under Section 114 of Income Tax Ordinance, within due date.

In case of failure to furnish return by due date, such person shall pay a penalty of equal to higher of:

(a) 0.1 per cent of the tax payable in respect of that tax year for each day of default; or

(b) rupees one thousand for each day of default: Provided that minimum penalty shall be —

(i) rupees ten thousand in case of individual having seventy-five percent or more income from salary; or

(ii) rupees fifty thousand in all other cases:

READ MORE: FBR advised to fix glitches for smooth filing of income tax returns

Provided further that maximum penalty shall not exceed two hundred percent of tax payable by the person in a tax year:

Provided also that the amount of penalty shall be reduced by 75 per cent, 50 per cent and 25 per cent if the return is filed within one, two and three months respectively after the due date or extended due date of filing of return as prescribed under the law;

Explanation.— For the purposes of this entry, it is declared that the expression “tax payable” means tax chargeable on the taxable income on the basis of assessment made or treated to have been made under section 120, 121, 122 or 122D.

The tax laws also prescribed that where any person fails to furnish wealth statement or wealth reconciliation statement. In such case person shall pay a penalty of 0.1 per cent of the taxable income per week or Rs.100,000 whichever is higher.

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The FBR sources said that besides imposition of penalties for failure to file return by due date the defaulting person will also not be included in the active taxpayers list.

Section 182A of the Income Tax Ordinance, 2001 explained the situation when return not filed within due date.

Section 182A. Return not filed within due date.—(1) Notwithstanding anything contained in this Ordinance, where a person fails to file a return of income under section 114 by the due date as specified in section 118 or by the date as extended by the Board under section 214A or extended by the Commissioner under section 119, as the case may be, such person shall—

(a) not be included in the active taxpayers’ list for the year for which return was not filed within the due date:

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Provided that without prejudice to any other liability under this Ordinance, the person shall be included in the active taxpayer ‘ list on filing return after the due date, if the person pays surcharge at Rupees-

(i) twenty thousand in case of a company;

(ii) ten thousand in case of an association of persons;

(iii) one thousand in case of an individual.

“Explanation.—For the removal of doubt it is clarified that the provisions of this section shall apply from tax year 2018 and onwards for which the first Active Taxpayers List is to be issued on first day of March, 2019 under Income Tax Rules, 2002.; and

(b) not be allowed, for that tax year, to carry forward any loss under Part VIII of Chapter IV;

(c) not be issued refund during the period the person is not included in the active taxpayers’ list; and

(d) not be entitled to additional payment for delayed refund under section 171 and the period the person is not included in the active taxpayers’ list, shall not be counted for computation of additional payment for delayed refund.

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