Karachi, January 5, 2025 – The Federal Board of Revenue (FBR) has outlined severe consequences for the failure to deposit sales tax dues, including a potential three-year jail term. According to the Sales Tax Act, 1990, individuals who fail to remit the required sales tax within the prescribed deadlines face strict fines, penalties, and even imprisonment.
Under the FBR’s regulations, anyone who does not deposit the full sales tax amount, or any part of it, as required by the law or the related rules and orders will incur a penalty. The penalty for non-payment will be either a fine of ten thousand rupees or five percent of the tax amount due, whichever is greater. However, if the sales tax amount is settled within ten days of the due date, the penalty reduces to a daily fine of five hundred rupees for each day of default.
The FBR also clarified that no penalty will be imposed for the first instance of miscalculation of sales tax during the year. However, failure to pay the sales tax due, even after the issuance of a notice by an officer of Inland Revenue (not below the rank of Assistant Commissioner), will lead to more severe repercussions. If the defaulter does not pay within sixty days of receiving such a notice, they will be further liable to a penalty. This could include a conviction that may result in imprisonment for up to three years, a fine equal to the tax amount owed, or both.
This stringent penalty system reflects the FBR’s commitment to improving compliance with the sales tax laws and ensuring timely payments. The law is designed to discourage delays in the deposit of sales tax, emphasizing that non-compliance can lead to significant legal consequences, including imprisonment.
The FBR’s move highlights the importance of adhering to tax deadlines and encourages businesses and individuals to prioritize their sales tax obligations to avoid severe financial and legal repercussions.