Thursday, 22 February 2024

Penalties will not be imposed on late filers of income tax returns: FBR

The Federal Board of Revenue (FBR) has decided to not penalize late filers across the board for technical and non-technical barriers to filing income returns.

Federal Board of Revenue (FBR) has softened its stance on imposing fines on late filers in the tax year 2020-21. Although the tax authority has not imposed any fines, the fines have been discussed for some time.

Ashfaq Ahmed, a member of Inland Revenue Operations at the FBR, said: “Fines and penalties on late filers are used not as a tool to collect revenue but as a tool to prevent late filing.”

Ashfaq Ahmed | Member IRS Operations

FBR may impose penalty on case to case basis

Sources quoted him as saying during a meeting with the Karachi Tax Bar Association (KTBA) on the income tax returns for the 2020-21 tax year. An FBR official said late filers were liable for fines and penalties but the board could rule on a case-by-case basis. It may be added here that the last date for filing income tax returns was December 8, 2020, for salaried and business people, taxpayers declaring tax returns under the final tax regime and companies with special tax year. The deadline for corporate taxpayers to file returns was December 31, 2020. No further extension is allowed.

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No of tax returns filed

FBR received about 1.8 million tax returns by December 8, 2020. Further directed to all tax officers to extend the date for taxpayers submitting applications to the Commissioner Inland Revenue. As of January 15, the number of income tax return filers has increased to 2.4 million.

Penalties for late filing of tax returns

Section 182 of the Income Tax Ordinance 2001 defines penalties and fines for those who late file. If an individual fails to submit his income tax returns. He is liable to pay equal to 0.1% of the tax payable in respect of that tax year for each day of default. Subject to a maximum penalty of 50% of the tax payable. But if the penalty worked out is less than Rs40,000, or if no tax is payable for that tax year then he will pay a penalty of Rs40,000.

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Provided that if 75% of the income is from salary and the amount of income under salary is less than Rs. 50 lakhs, the minimum amount of penalty will be Rs. 5000. Similarly, if a person fails to submit wealth statement. Which must be filed along with the return of income by the due date. Such person will be charged 0.1% of taxable income per week or Rs 100,000 rupees whichever is higher.

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The tax official told KTBA that the FBR was cracking down on non-filers. FBR would initiate legal action against non-compliant taxpayers. KTBA officials said many taxpayers have real reasons for being late in filing. Therefore, the FBR should take a lenient stance and withdraw the penalty on returns filed after the due date.

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