Thursday, 18 August 2022
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Updated Penalty Provisions on failure to file the return within the due date 2021

The Federal Board of Revenue (FBR) has clarified that a person who fails to file the return within the due date will have to pay a penalty of higher of Rs1,000 or 0.1 percent of tax payable for each day of default under the Tax Laws (Third Amendment) Ordinance, 2021.

The FBR has issued an income tax circular 7 of 2021 here on Thursday to explain the Tax Laws (Third Amendment) Ordinance, 2021. As per the FBR, a new penal regime for non-filing of income tax return has been introduced through amendment to Section 182 of the Ordinance.

A person who fails to file return within due date will have to pay a penalty of higher of Rs1,000 or 0.1 percent of tax payable for each day of default. However, the minimum penalty shall be Rs10,000 in case of individuals having 75 percent or more income from salary and Rs50,000 in other case, and the maximum penalty shall not exceed 200 percent of tax payable by the person.

Furthermore, the above mentioned penalties shall also be reduced by 75 percent, 50 percent, and 25 percent in case return is filed by the person within one, two or three months respectively, after the due date. The general penalty for contravening any provisions of the ordinance has been omitted. The FBR said that the broadening of the tax base is the highest priority of the Board and paramount to increase the revenue.

To augment the existing measures to broaden the tax net and to increase the number of return filers, a new section 114B has been inserted, which empowers the Board to issue Income Tax General Order in respect of persons who are not appearing on ATL but are liable to file return under the provisions of the Ordinance. The Board is also powered to discontinue the use of mobile phone connections, electricity connections and gas connections of the non-filers.

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