Non-Filers may Face Charges of Concealment of Income

FBR may resort to provisions of Tenth Schedule of Income Tax Ordinance, 2001 under which non-filers of income tax returns for tax year 2020 may face charges of concealment of income.

Rule 3 of the Tenth Schedule of Income Tax Ordinance, 2001, states that;

1) Where for a tax year person’s tax has been collected or deducted in accordance with rule 1 and the person fails to file return of income for that tax year within the due date provided in section 118 or as extended by the Board, the Commissioner shall notwithstanding anything contained in sub-sections (3) and (4) of section 114, within sixty days of the due date provided in section 118 or as extended by the Federal Board of Revenue (FBR) make a provisional assessment of the taxable income of the person and issue a provisional assessment order specifying the taxable income assessed and tax due thereon.

2) In making the provisional assessment under sub-rule (1), the Commissioner shall impute taxable income on the amount of tax deducted or collected under rule 1 by treating the imputed income as concealed income for the purposes of clause (d) of sub-section (1) of section 111;

Provided that the provision of section 111 shall be applicable on unexplained income, asset or expenditure in excess of imputed income treated as concealed income under this rule.

The last date for filing income tax return for tax year 2020 was expired on December 08, 2020 and a large number of taxpayers have failed to comply with the mandatory requirement of filing annual return.

Currently, the applicable ATL is of tax year 2019 and will remain applicable till February 28, 2021. The ATL for tax year 2020 will be issued on March 01, 2021 and will applicable till February 28, 2022.

According to rule 01 of the Tenth Schedule the tax rate of withholding is 100% higher for persons having taxable income but not on the ATL.