Rules for persons not appearing in ATL have been unveiled by the Federal Board of Revenue (FBR) through updated version of the Income Tax Ordinance, 2001, incorporating amendments through the Finance Act, 2021.
This update, effective up to June 30, 2021, includes the elucidation of rules for individuals not appearing in the Active Taxpayers’ List under the Tenth Schedule.
The Tenth Schedule of the Income Tax Ordinance, 2001, provides detailed guidelines for the deduction or collection of tax from individuals not listed in the Active Taxpayers’ List. The key points outlined in the schedule are as follows:
Rate of Deduction or Collection:
In cases where tax is required to be deducted or collected from individuals not appearing in the active taxpayers’ list, the rate of tax to be deducted or collected is increased by one hundred percent of the rate specified in the First Schedule to the Ordinance.
Persons not Required to File Return or Statement:
The withholding agent or the person responsible for tax collection must furnish a notice to the Commissioner before collecting or deducting tax, providing details such as the individual’s name, CNIC or NTN, address, nature and amount of the transaction, and reasons justifying why the person was not required to file a return or statement.
Provisional Assessment:
If a person’s tax has been collected or deducted, and they fail to file a return within the specified time, the Commissioner is empowered to make a provisional assessment of the taxable income. This assessment involves imputing taxable income based on the tax deducted or collected.
Finalization or Abatement of Provisional Assessment:
The provisional assessment becomes final after forty-five days unless returns of income and wealth statements are filed within this period. If returns are filed within the stipulated time, the provisional assessment stands abated, and the tax deducted or collected is adjustable against the tax payable in the return.
Penalties for Non-Furnishing and Concealment of Income:
If the provisional assessment is treated as final, the Commissioner may initiate proceedings for penalties under section 182 for non-furnishing and concealment of income within thirty days.
Imputed Income:
Imputed income is defined for individuals, associations of persons, and companies based on the tax collected or deducted at a higher rate for not appearing in the active taxpayers’ list.
Withholding Agent’s Responsibility:
If the withholding agent fails to furnish complete or accurate particulars of persons not on the active taxpayers’ list, the Commissioner has the authority to initiate proceedings against the withholding agent within thirty days.
Amendment of Assessment:
The Commissioner can amend an assessment order if the imputed income is less than the amount on which tax was deducted or collected, or if definite information indicates income has escaped assessment or has been under-assessed.
Application of Ordinance Provisions:
The general provisions of the Income Tax Ordinance, 2001, not specifically covered in the Tenth Schedule, apply mutatis mutandis in proceedings against persons not on the active taxpayers’ list.
Exceptions:
The Tenth Schedule does not apply to tax collectible or deductible under specific sections mentioned in the schedule.
The provided information serves as a comprehensive guide to the rules and procedures outlined in the Tenth Schedule of the Income Tax Ordinance, 2001. It is essential for taxpayers and withholding agents to familiarize themselves with these provisions to ensure compliance with the latest amendments in tax regulations.
