FBR Takes Measures against Non-Filers; Penalty Imposed

Taxpayers including salaried persons, business individuals, Association of Persons (AOPs) and corporate entities, who were required to file their returns by due date i.e. September 30, 2020 extended up to December 08, 2020, have received notices of non-compliance. The taxpayers have received notices to file their returns for tax year 2020 along with payment of fine and penalty.

FBR issued the finalized return form for tax year 2020 on September 08, 2020 for which the last date was September 30, 2020. Tax bars of the country advised the FBR that taxpayers should be given 90 days for filing returns as per law. Therefore, FBR extended the date up to December 08, 2020 and made it clear that no further date extension would be granted.

FBR by December 08, 2020 received around 1.8 million income tax returns for tax year 2020. Furthermore, around 300,000 taxpayers got date extension after filing applications on the last date. This means that the number of return filers, who made compliance of the due date, reaches to around 2.1 million for tax year 2020 and a large number of taxpayers are required to file their returns with payment of fine and penalty.

Under Section 182 of Income Tax Ordinance, 2001, fine and penalty would be imposed on non-compliant taxpayers;

Section 182: Where any person fails to furnish a return of income as required under section 114 within the due date. 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.

Provided that if 75% 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. Whereas, if any person fails to provide the wealth statement or wealth reconciliation statement then such person shall pay a penalty of 0.1% of the taxable income per week or Rs.100,000 whichever is higher. The late filers are also required to pay a fee for appearance in Active Taxpayers List (ATL) for tax year 2020, which will be issued on March 01, 2021.