The Federal Board of Revenue is considering to introduce a fourfold increase in the penalty on non-filers of tax returns as an attempt to increase the number of return-filers and improve tax compliance.
In the tax year 2017, the FBR issued over four million national tax numbers (NTN) but received only 1.84 million tax returns. In 2018, the tax returns received amounted to 1.9 million, which is still far from the NTNs issued.
As per the sources, FBR would propose an amendment in the Income Tax Ordinance 2001 in the upcoming finance bill. The penalty recommended by the FBR might go up from Rs.20,000 to a whopping Rs.100,000 in case of failure to fulfill the mandatory filing requirement.
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FBR can also recommend the same increase in the penalty for failure of mandatory submission of wealth statement. The filing of wealth statement is required before the filing of annual income tax returns.
So, if the recommendations get approved, the aggregate penalty for non-filer of return and wealth statement will amount to Rs.200,000.
Under the law, individuals who have obtained the NTN have to file the income tax returns. The Computerized National Identity Card (CNIC) is deemed as NTN if the individual with taxable income has not been issued an NTN.
