The federal government has proposed a substantial increase in the fee that Associations of Persons (AOPs) must pay to restore their status on the Active Taxpayers List (ATL) after missing the income tax return filing deadline.
Under the Finance Bill 2026, the ATL restoration surcharge for AOPs has been proposed to increase from Rs. 10,000 to Rs. 50,000, representing a fivefold rise.
The change has been proposed through amendments to Section 182A of the Income Tax Ordinance, 2001, which governs the ATL maintained by the Federal Board of Revenue.
An AOP is a tax category that generally includes partnership firms, joint ventures, and other groups of individuals or entities that earn income collectively.
These businesses are required to file annual tax returns within the prescribed deadline to maintain active taxpayer status.
Under existing rules, AOPs that fail to file their returns on time are removed from the ATL and become subject to higher withholding tax rates on various transactions. Their status can currently be restored by filing the overdue return and paying a Rs. 10,000 surcharge.
The Finance Bill proposes raising this amount to Rs. 50,000, significantly increasing the cost of late compliance.
Being outside the ATL can have major financial implications for businesses, as non-active taxpayers face higher tax deductions on banking transactions, property dealings, vehicle purchases, contracts, and other business-related activities.
If approved by Parliament, the revised surcharge will take effect from July 1, 2026, making delayed tax filing considerably more expensive for partnership firms and other AOPs seeking to regain ATL status.
