Tax Lawyers Urge FBR to Cancel Rs. 25,000 Surcharge on Late Filers

The Pakistan Tax Bar Association (PTBA) has asked the Federal Board of Revenue (FBR) to withdraw the requirement for taxpayers to pay the enhanced surcharge under Section 182A of the Income Tax Ordinance to qualify for the Active Taxpayers List (ATL) for Tax Year 2025, arguing that the new levy cannot legally be applied retrospectively.

In a letter addressed to FBR Chairman Rashid Mahmood Langrial, the association said it had received numerous complaints from tax practitioners across the country regarding the implementation of the enhanced surcharge introduced through the Finance Act, 2026.

According to PTBA, the FBR’s IRIS portal is currently requiring taxpayers to pay an enhanced default surcharge of Rs. 25,000 in the case of individuals to obtain ATL status for Tax Year 2025. The association argued that this treatment is inconsistent with the legislative intent and established legal principles governing tax laws.

The association maintained that the enhanced surcharge creates a new financial liability and, in the absence of an explicit provision making it retrospective, cannot be enforced for Tax Year 2025. PTBA cited settled judicial principles that substantive amendments imposing new liabilities generally operate prospectively unless Parliament expressly provides otherwise.

Referring to amendments made through the Finance Act, 2002, PTBA noted that the courts had previously interpreted similar provisions as applying only to appeals arising from later tax years rather than earlier assessment periods, arguing that the same principle should apply in the present case.

The association has requested the FBR to direct Pakistan Revenue Automation (Private) Limited (PRAL) to remove the IRIS system validation requiring payment of the enhanced surcharge for Tax Year 2025.

Alternatively, it has proposed delaying implementation until the Tax Year 2026 income tax return becomes available, allowing the amended provision to take effect prospectively and in accordance with settled legal principles