A Notice under Section 138 of the Income Tax Ordinance, 2001 is a legal document issued by the FBR to a taxpayer demanding payment of outstanding tax dues. It’s essentially a warning before initiating legal action for recovery.
Why is it issued?
The FBR can issue a Notice under Section 138 in various situations, such as:
- Unpaid taxes: If you haven’t paid your assessed income tax liability for a specific tax year.
- Deficiency assessment: If the FBR believes your declared income is lower than your actual income and demands additional tax.
- Penalty or fine: If you’ve incurred penalties or fines for late filing, non-compliance, or other tax-related offenses.
What does the notice contain?
The notice will typically include the following details:
- Your name and tax identification number (NTN)
- The tax year and amount of outstanding tax dues
- The reason for the notice (e.g., unpaid tax, deficiency assessment)
- Interest and penalty charges (if applicable)
- Deadline for payment (usually 30 days)
- Consequences of non-compliance (e.g., legal action, seizure of assets)
What should you do?
Upon receiving a Notice under Section 138, it’s important to act quickly and take the following steps:
- Review the notice carefully: Understand the reason for the notice and the amount demanded.
- Gather relevant documents: Collect your income tax returns, bank statements, and any other documents supporting your income and tax payments.
- Verify the amount: Check if the calculations are correct and contact the FBR if you find any errors.
- Consider your options: You can choose to pay the full amount by the deadline, request an installment plan, or file an appeal against the notice.
- Seek professional advice: Consulting a tax lawyer or accountant is recommended for complex cases or if you need help navigating the legal aspects.
Important points to remember:
- Ignoring the notice can lead to serious consequences, including legal action, asset seizure, and travel bans.
- Early action and communication are crucial to resolve the issue quickly and avoid further penalties.
- Seeking professional advice can help you understand your rights and options, ensuring a fair and efficient resolution.