ISLAMABAD: The Federal Board of Revenue (FBR) has revised the rates of fines and penalties for individuals who fail to file their annual income returns despite having taxable income or being required to file under the law.
The updated rates are part of the Income Tax Ordinance, 2001, which has been amended through the Finance Act, 2020 and incorporated up to June 30, 2020.
According to the updated Ordinance, any person who fails to submit a return of income as required under Section 114 of the Ordinance by the due date will incur a penalty. The penalty is calculated as 0.1 percent of the tax payable for each day of default, with a maximum penalty of 50 percent of the tax payable for that tax year. If the penalty, as calculated, is less than Rs40,000 or if no tax is payable for that year, the person must pay a minimum penalty of Rs40,000.
However, an exception is provided for individuals whose income primarily comes from salary. If 75 percent of their income is from salary and the total salary income is less than Rs5 million, the minimum penalty will be Rs5,000.
The FBR’s update is intended to ensure compliance with tax regulations and timely filing of returns. It emphasizes the importance of adhering to filing deadlines to avoid substantial penalties. The detailed explanation in the Ordinance clarifies that the term “tax payable” refers to the tax chargeable on the taxable income based on assessments made or treated to have been made under Sections 120, 121, 122, or 122C of the Ordinance.
The revision aims to streamline tax administration and encourage taxpayers to fulfill their obligations. The FBR hopes that by clearly outlining the penalties, taxpayers will be more diligent in submitting their returns on time.
Tax experts advise individuals to take note of these updates and ensure that they file their returns promptly to avoid unnecessary financial burdens. The FBR’s stringent measures reflect its commitment to enhancing tax compliance and improving revenue collection.
In summary, the FBR’s updated penalties serve as a significant reminder of the legal requirements for filing annual income returns. Taxpayers are urged to review these updates and adhere to the deadlines to avoid incurring penalties, thereby contributing to the country’s fiscal health and ensuring a smoother tax administration process.
