What is the “Active (Late Filer)” status?
The “Active (Late Filer)” status is a designation given by the Federal Board of Revenue (FBR) to individuals who fail to file their income tax returns by the extended deadline. This categorization was introduced in the Finance Act 2023.
Initially, the FBR applied this status to taxpayers who missed the deadline for filing their 2023 tax returns. However, due to public outcry and legal challenges, the FBR temporarily suspended the implementation of this status for the 2023 tax year.
It’s important to note that the suspension of the “Active (Late Filer)” status was specific to the 2023 tax year. For the 2024 tax year, the status remains in effect, and taxpayers who fail to file their returns on time will still be categorized as “Active (Late Filer)” and face the associated consequences.
Why was the “Active (Late Filer)” status introduced?
The FBR aimed to encourage timely tax filing and to expand the tax net by identifying and registering non-filers.
How doesLate Fileraffect Tax Rates?
- Higher Property Selling Taxes: Late filers are subject to higher tax rates under Section 236C of the Income Tax Ordinance, 2001, when selling property 6%.
- Higher Property Buying Taxes: Late filers to face higher withholding tax rates under Section 236K of the Income Tax Ordinance, 2001, when purchasing property 6%.
Recent Developments:
The FBR has reintroduced the “Active (Late Filer)” status for taxpayers who failed to file their income tax returns for the tax year 2024 by the extended deadline of October 31, 2024.
Who is affected by this change?
Taxpayers who filed their 2024 income tax returns after the October 31, 2024 deadline will be categorized as “Active (Late Filers).”
Why was the “Active (Late Filer)” status removed?
Following public outcry and a Lahore High Court decision, the FBR temporarily suspended the implementation of the “Active (Late Filer)” status on October 27, 2024.
The recent removal of the “Active (Late Filer)” status was limited to taxpayers who missed the 2023 tax return deadline. This clarification aims to address the misconception that the category has been completely abolished. It’s crucial to remember that late filers for the 2024 tax year will still face the associated consequences.
Conclusion:
While the FBR temporarily removed the “Active (Late Filer)” status for those who missed the 2023 tax return deadline, it’s important to note that this relaxation does not extend to late filers for the 2024 tax year. Individuals who filed their 2024 returns after the extended deadline will still be categorized as late filers and may face higher tax rates on property transactions.
