File Your Tax Returns on Time or Pay FBR Rs. 25,000 Fine

Taxpayers have until September 30, 2026, to file their Tax Year 2026 income tax returns and avoid a Rs. 25,000 surcharge for not appearing on the Federal Board of Revenue’s (FBR) Active Taxpayer List (ATL).

The late surcharge used to be Rs. 1,000. Now it is 2,400 percent higher. At present, FBR determines ATL status based on the filing of Tax Year 2025 returns. However, following the practice adopted last year, the ATL is expected to be updated from July 1, 2026, using Tax Year 2026 returns.

Tax expert Amer Sharif told ProPakistani that the Rs. 25,000 surcharge is not linked to resident or non-resident status. It depends on whether your name is on the ATL.

Scenario 1

“Suppose you (whether resident or non-resident) have never filed a tax return and plan to undertake a transaction subject to higher tax rates for non-filers on 29 June 2026. Since your name is not on the ATL, the transaction will attract non-filer rates under the relevant provisions,” he said.

To avoid this, the taxpayer can immediately file Tax Year 2025 return and pay the Rs. 1,000 late filing penalty. Once filed, their name will be automatically included in the ATL by tomorrow.

Scenario 2

“Suppose you (whether resident or non-resident) plan to undertake a transaction subject to higher non-filer tax rates next month. You can file your Tax Year 2026 return once the return form is made available by the FBR. Based on FBR’s practice last year, your name will be included in the ATL without any Rs. 25,000 surcharge, provided you file the return within the due date (upto 30th September 2026), he further explained.

Scenario 3

Now suppose a resident/non-resident Pakistani plans to undertake such a transaction in October 2026 and file their Tax Year 2026 return after the due date of 30 September 2026, assuming the FBR does not extend the deadline. In that case, under the new law introduced through the budget, they will have to pay a Rs. 25,000 surcharge to get their name included in the ATL.

The full explanation on the late ATL surcharge can be viewed on Amer’s X feed (@AmerSharifOFCL).

Besides the big fine, failure to file on time could also result in losing ATL status, which carries higher withholding tax rates and other restrictions until the taxpayer is included in the list again.

The Finance Division has a normal practice of extending tax return deadlines. Do not be surprised if an extension is offered.