The Federal Board of Revenue (FBR) has reinforced its commitment to maintaining the integrity of the tax system by imposing penalties on individuals who repeatedly make erroneous calculations in their sales tax returns.
According to Section 33(6) of the Sales Tax Act, 1990, individuals who pay less than the actual sales tax due to repeated errors in their calculations are liable to face penalties.
The FBR, in its updated Sales Tax Act, 1990, incorporating amendments through the Finance Act, 2021, has included provisions to address instances where taxpayers consistently make miscalculations leading to an underpayment of sales tax. Section 33(6) specifically targets this scenario and outlines the penalties associated with such offenses.
The text of Section 33(6) of the Sales Tax Act, 1990, reads as follows:
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: –
6. Any person who repeats erroneous calculation in the return during a year whereby the amount of tax less than the actual tax due is paid.
Such person shall pay a penalty of five thousand rupees or three per cent of the amount of the tax involved, whichever is higher.”
This provision emphasizes the importance of accurate and consistent tax calculations, particularly in sales tax returns. The penalty applies to individuals who, over the course of a year, repeatedly make errors in their calculations, resulting in the underpayment of sales tax.
Key points regarding the penalties for repeated erroneous calculations under Section 33(6) include:
1. Repeat Offenses: The provision targets individuals who consistently make erroneous calculations in their returns, leading to the underpayment of sales tax.
2. Penalty Amount: Such individuals are liable to pay a penalty of Rs5,000 or three percent of the amount of the tax involved, whichever is higher. This penalty is in addition to any other punishments that may apply under relevant laws.
3. Deterrent Measure: The imposition of penalties serves as a deterrent, encouraging taxpayers to exercise diligence and accuracy in their tax calculations to avoid financial repercussions.
4. Compliance Emphasis: The provision reinforces the importance of compliance with tax regulations and underscores the significance of precise calculations in tax reporting.
The FBR encourages taxpayers to adopt best practices in tax compliance and to utilize available resources to ensure accurate calculations in their returns. It is essential for individuals to stay informed about amendments to tax laws and seek professional advice when needed to navigate the complexities of tax regulations.
The inclusion of such provisions reflects the FBR’s commitment to fostering a tax environment characterized by fairness, accuracy, and accountability. By penalizing repeated errors in calculations, the FBR aims to uphold the principles of equity and transparency in the tax system.
