The Federal Board of Revenue (FBR) has introduced penalty for failure to file sales tax returns within the stipulated timeframe under Section 33(1) of the Sales Tax Act, 1990.
According to the updated version of the Act, effective until June 30, 2021, individuals or entities failing to submit their returns on time will be subject to a penalty of Rs10,000.
Section 33(1) outlines offenses and corresponding penalties within the framework of the Sales Tax Act, 1990. The specific penalty for failure to furnish a return within the due date is highlighted in the following excerpt:
33. Offences and penalties.– Whoever commits any offence shall, in addition to and not in derogation of any punishment to which he may be liable under any other law, be liable to the penalty mentioned against that offence:
1. Where any person fails to furnish a return within the due date. Such person shall pay a penalty of Rs10,000:
Provided that in case a person files a return within ten days of the due date, he shall pay a penalty of Rs200 for each day of default.
This section delineates the penalty structure for late submission of sales tax returns, and the Rs10,000 penalty is imposed on individuals or entities failing to meet the specified due date. However, a provision for reduced penalties is introduced for those who file their returns within ten days of the due date, with a daily penalty rate of Rs200 during the initial ten-day grace period.
The amendment aims to encourage timely compliance with sales tax return filing obligations while providing a brief window for mitigating penalties for those who rectify the delay within the stipulated period.
Late filing of tax returns not only incurs financial penalties but can also lead to disruptions in the smooth functioning of tax administration and revenue collection. By implementing such penalties, the FBR seeks to instill discipline in the tax filing process and ensure that taxpayers adhere to the prescribed timelines.
This move aligns with the broader strategy of the FBR to streamline tax compliance procedures and enhance overall efficiency in revenue collection. Timely and accurate filing of tax returns is crucial for maintaining transparency in financial transactions, aiding in effective tax administration, and supporting the government’s fiscal policies.
As the FBR continues to update and refine tax-related legislation, the penalties outlined in Section 33(1) of the Sales Tax Act, 1990 serve as a reminder for taxpayers to prioritize the timely submission of their sales tax returns to avoid financial consequences. The introduction of the penalty provision is part of the ongoing efforts to create a more accountable and responsive tax ecosystem in Pakistan.
