Penalty amount revised for late filing income tax returns

Penalty amount revised for late filing income tax returns

ISLAMABAD: Penalty amount has been revised for filing income tax returns after due date.

The Finance Bill, 2022 proposed revision in penalty amount for late filing of income tax returns by salaried persons and other taxpayers.

The government presented federal budget 2022/2023 on June 10, 2022 and proposed various amendments to tax laws for ensure documentation and broadening of tax base.

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The Finance Bill, 2022 proposed amendment to Section 182 of Income Tax Ordinance, 2001. According to the amendment penalty amount revised where any person fails to furnish a return of income as required under Section 114 within the due date.

The proposed amendment is:

“Such person shall pay a penalty 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:

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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 existing amount of penalty is as followed:

Such person shall pay a penalty equal to 0.1 per cent of the tax payable in respect of that tax year for each day of default subject to a maximum penalty of 50 per cent of the tax payable provided that if the penalty worked out as aforesaid is less than forty thousand rupees or no tax is payable for that tax year such person shall pay a penalty of forty thousand rupees:

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Provided that If seventy-five percent of the income is from salary and the amount of income under salary is less than five million Rupees, the minimum amount of penalty shall be five thousand Rupees:

Provided further that if taxable income is up-to eight hundred thousand Rupees, the minimum amount of penalty shall be five thousand Rupees:

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 122C.

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