TAX PERIOD FOR INCOME TAX RETURN
Income Tax Return relates to a specific tax year. A tax year is a period of twelve months ending on 30th day of June i.e. the financial year and is denoted by the calendar year in which the said date falls. For example tax year 2017, covers a period from 1st July 2016 to 30th June 2017.
Special Tax Year
Tax year includes special tax year, which means any period of twelve months and is denoted by the calendar year relevant to the normal tax year in which closing date of the special tax year falls. For example, tax year for the period of twelve months from January 01, 2016 to December 31, 2016 shall be denoted by calendar year 2017 and the period of twelve months from October 01, 2016 to September 30, 2017 shall be denoted by calendar year 2018.
Last Date to file income tax returns / due date to submit tax returns for tax year 2021
There are three types of businesses according to there legal structure:
- Individual / Sole Proprietorship type of business
- Firm / Partnership firm / Association of Persons (AOPs)
- Company (Private, Public, Listed, Single Member Company)
According to Income Tax Ordinance, 2001 FBR has given due dates for filing annual income tax returns. If tax returns are filled after such last dates then FBR can impose penalty for late submission of tax returns.
Following are due dates / last dates for submission of tax returns according to type of business:
|Individual & Association of Person (AOP)||On or before 30th September|
|Company||On or before 31st December|
|Company having a special tax year||On or before 30th September|
Tax Notices from FBR under section 114(4) and 182(2)
Federal Board of Revenue (FBR) issues tax notices on non-submission of tax return for particular tax year. FBR issues tax notices for imposition of penalty under section 182(2) for Default of Section 114 of The Income Tax Ordinance,2001 for filing of tax returns within the given time period. FBR also issuing tax notices under section 114(4) for submission of tax returns under a given period of time. Whereby required to file tax returns under sub-section (4) of section 114 of the Income Tax Ordinance, 2001.
In tax notice FBR may ask to reply within 30 days by submission of tax returns or to provide any particular reason of non-filing. In case of non compliance to above notice, FBR will impose penalty under section 182(2).
Specimen of Tax Notice under section 182(2) is reproduced here:
“You have failed without reasonable cause to furnish within the time allowed the return of income/wealth statement in respect of the tax year 2020 which you were required to furnish under section 114 of the Income Tax Ordinance, 2001 (I.T.O. 2001), by December 8, 2020. 2.You are requested in pursuance of section 182(2) of the I.T.O. 2001 to show cause as to why penalty as prescribed under section 182(1)(1) of the I.T.O. 2001 should not be imposed on you on account of non-compliance of statutory provisions of section 114 of the I.T.O 2001.3.Please also note that non-filing of return of total income is a statutory responsibility and its non-compliance may also lead to initiation of criminal proceedings under section 192(1) I.T.O. 2001.4.Your explanation is required to be filed by January 13, 2021.“
Notice under section 114(4) is reproduced here:
“Whereas you have not furnished a Return of Income for the tax year mentioned above, required to be filed under sub-section (4) of section 114 of the Income Tax Ordinance, 2001 (XLIX of 2001);You are, hereby, requested to furnish on or before the date mentioned above, a Return of Income for the said tax year, in the prescribed form and verified in the prescribed manner;Please note that failure to comply with any of the terms of this notice may result in a best judgment assessment under sub-section 1 of section 122C of the said Ordinance, and may also render you liable to a penalty under sub-section 1 of section 182, or, prosecution under section 191 of the said Ordinance or both.”
Penalty for non-filing income tax returns, wealth statement, foreign assets/income statement & active status.
Section 182(1) Offences and penalties – Non-filing of Income Tax returns
Offence: Where any person fails to furnish a return of income as required under section 114 within the due date.
Penalties: Such person shall pay a penalty 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 provided that if the penalty worked out as aforesaid is less than [forty] thousand rupees or no tax is payable for that tax year such person shall pay a penalty of [forty] thousand rupees.
Minimum penalty – Salaried case
If seventy-five percent of the income is from salary and the amount of income under salary is less than five million Rupees the minimum amount of penalty shall be five thousand Rupees.
Explanation.— For the purposes of this entry, it is declared that the expression “tax payable” means tax chargeable on the taxable income on the basis of assessment made or treated to have been made under section 120, 121, 122 or 122C.
Amendment in Section 182(1) under Finance Act 2021
“Provided further that if taxable income is up-to eight hundred thousand Rupees, the minimum amount of penalty shall be five thousand Rupees:
Provided also that the amount of penalty shall be reduced by 75%, 50% and 25% if the return is filed within one, two and three months respectively after the due date or extended due date of filing of return as prescribed under the law.
Section 182(1AA) – Failure to furnish wealth statement
Offence 114 & 116: Where any person fails to furnish wealth statement or wealth reconciliation statement.
Penalty: Such person shall pay a penalty of “0.1% of the taxable income per week or Rs.[100,000] whichever is higher.”
Section 182(IAAA) – fails to furnish a foreign assets and income statement
Offence (116A): Where any person fails to furnish a foreign assets and income statement within the due date.
Penalty: Such persons shall pay a penalty of 2 percent of the foreign income or value of the foreign assets for each year of default.
Section 182(A) – Return not filed within due date & penalty for active taxpayer status
Offence: If a person fails to file a return of income under section 114 by the due date as specified in section 118. He may not be included in the active taxpayers’ list for the year for which return was not filed within the due date.
Penalty: However, a person shall be included in the active taxpayer list on filing return after the due date, if the person pays surcharge:
(i) twenty thousand in case of a company;
(ii) ten thousand in case of an association of persons;
(iii) one thousand in case of an individual.