For tax year 2026, the Income Tax Ordinance, 2001 (updated) prescribes strict penalties for failure to file a return of income.
According to FBR Section 114, any person who fails to furnish a return within the due date is liable to pay a penalty calculated as the higher of:
1. 0.1% of the tax payable for each day of default, or
2. Rs1,000 per day of default
Minimum and Maximum Penalties
| Type of Taxpayer | Minimum Penalty | Maximum Penalty |
| Individuals with ≥75% income from salary | Rs. 10,000 | 200% of tax payable |
| Other individuals & entities | Rs. 50,000 | 200% of tax payable |
Tip: Filing the return late but within a few months can reduce penalties:
• Within 1 month after due date → 75% reduction
• Within 2 months → 50% reduction
• Within 3 months → 25% reduction
Penalty for Non-Filing of Wealth Statements
If a person fails to submit a wealth statement or wealth reconciliation statement, the penalty is:
• 2% of foreign income or value of foreign assets per year of default.
Special Cases: Section 117
For persons required to file under sub-section (3) of Section 117 (as notified in a notice by FBR):
• Penalty is the higher of 0.1% of tax payable per day or Rs. 1,000 per day,
• Minimum penalty: Rs. 10,000 for individuals, Rs. 50,000 for others.
⚡ Tip: Always file your return on time to avoid these steep penalties, especially for high-income individuals or businesses with foreign assets.
Step-by-Step: Avoiding Penalties
1. Verify your due date for filing income tax return on the FBR portal.
2. Prepare your tax documents including salary slips, business accounts, and foreign asset details (if any).
3. Submit your return online via FBR e-portal
4. Check for confirmation to ensure your filing is accepted and your penalties are avoided.
FAQs – Penalty for Non-Filing in 2026
Q1: How is the penalty calculated if I file late?
Penalty = Higher of 0.1% of tax payable per day or Rs. 1,000/day. Reductions apply if filed within 1–3 months.
Q2: Is there a maximum penalty?
Yes, the maximum penalty cannot exceed 200% of tax payable.
Q3: What if I don’t file a wealth statement?
Penalty = 2% of foreign income or foreign assets per year of default.
Q4: Can the penalty be reduced?
Yes, filing within 1 month reduces it by 75%, within 2 months by 50%, and within 3 months by 25%.
Disclaimer: This article is for informational purposes only. For official guidance, consult the Federal Board of Revenue (FBR) or a certified tax professional.