Karachi, September 27, 2025 – The Federal Board of Revenue (FBR) has announced that the levy of default surcharge will continue during the tax year 2025-26 for all cases of non-compliance with the Sales Tax Act, 1990.
According to section 34 of the updated Sales Tax Act, taxpayers who fail to pay sales tax on time, make inadmissible adjustments, or incorrectly claim refunds will be liable to pay an additional default surcharge.
The rates for 2025-26 are as follows:
• A registered person who fails to pay the due tax or receives a refund by mistake will be charged a default surcharge at 12% per annum or KIBOR plus 3%, whichever is higher.
• In cases of tax fraud, the taxpayer will have to pay a default surcharge of 2% per month on the amount of tax evaded or refund fraudulently claimed. This surcharge will continue until the full liability, including the surcharge, is cleared.
For calculation purposes:
• In cases of inadmissible tax credit or refund, the period of default will be counted from the date of adjustment or refund received.
• In cases of non-payment of tax, the default period will begin from the 16th day of the month following the due date, up to the day before the actual payment is made.
The FBR clarified that this surcharge is separate from any penalties, ensuring stricter enforcement of compliance under the Sales Tax Act.
Disclaimer: This content is for informational purposes only and does not constitute legal or tax advice. Please consult professionals for guidance.