The Finance Act 2024 introduces various penalties for individuals and businesses who fail to comply with tax regulations. This article dives into some key areas where non-compliance can lead to hefty fines.
Late Filing of Tax Returns:
- If you fail to file your income tax return within the specified timeframe after receiving a notice, you’ll be penalized. This penalty is calculated in two ways, (Whichever amount is higher will be applied).
- 0.1% of the tax payable for each day of default.
- A flat rate of Rs. 1,000 per day of default.
- There’s a minimum penalty of Rs. 10,000 for individuals and Rs. 50,000 for other entities (companies, partnerships AOPs etc.).
Unregistered Traders and Shopkeepers:
- If you’re a trader or shopkeeper required to register under the Income Tax Ordinance (Tajir Dost Scheme) but haven’t done so, or haven’t paid the advance tax as specified, your shop could face the following consequences:
- First offense: Seal for seven days.
- Subsequent offenses: Seal for twenty-one days for each default.
Disobeying Income Tax General Orders:
- Failing to comply with an Income Tax General Order issued by the Federal Board of Revenue (FBR) within 15 days of its issuance can lead to significant penalties:
- First offense: Rs. 50 million fine.
- Subsequent offenses: Rs. 100 million fine.
- It’s important to note that the effective date for imposing these penalties can be notified by the FBR later.
Late Tax Payment on Share Transactions:
- If you fail to pay tax on the consideration of shares (sale price) at the time of payment or when registering shares with the Securities and Exchange Commission of Pakistan (SECP) or State Bank of Pakistan (SBP), a hefty penalty awaits:
- Penalty equal to 50% of the tax amount involved.
Incomplete or Inaccurate Tax Returns by Companies and Association of Persons:
- Companies and associations of persons who fail to meet tax return filing requirements can be penalized in the following ways:
- Not providing all necessary details or information in the return form.
- Submitting blank or incomplete annexures, statements, or documents.
- Attaching blank or incomplete annexures when required.
- The penalty for such non-compliance is:
- Rs. 500,000 OR
- 10% of the tax payable on the taxable income, whichever is higher.
Remember:
- Timely filing of tax returns, registrations, and payments can help you avoid these penalties and ensure tax compliance.
- For timely filing of Income Tax Returns contact us.
