Taxpayers in Pakistan are required to comply with legal obligations related to taxation. The Federal Board of Revenue communicates with taxpayers through tax notices, which play a vital role in ensuring proper compliance. In this comprehensive guide, we will discuss different types of tax notices issued by the government of Pakistan, their purposes, and how to respond to them.
Monitoring of Taxes
Corporate entities and individual withholding agents are responsible for collecting and paying taxes to the government on behalf of payments made by them. Tax payments are received several times during the year, and compliance is usually required on a monthly basis. To ensure proper collection and deduction of taxes at the source, notices under rule 44 are issued to taxpayers. These notices require the submission of compliance documents, and a hearing is fixed accordingly. After the hearing, the Commissioner issues his/her findings, and if tax is owed, a notice of tax demand is made under section 137.
Notices of audit are issued under section 177 of the Income Tax Ordinance, requiring taxpayers to submit all financial documents, including financial statements, ledgers, notes to accounts, tax deduction certificates, contracts, and more. If the verifications are not met, a tax demand is created under section 137.
These notices are issued for a specific transaction, and the Commissioner usually has definite information about the transaction and wants to inquire in detail. For example, buying or selling property, gift transactions, etc.
Advance Tax Notices
Under Section 147, notices to pay advance taxes are issued, which are mandatory for AOPs and companies. For individuals, it depends on their turnover.
Notices to File Returns
Under section 114, notices to file annual returns are issued if the taxpayer fails to file their return within the due date.
Understanding tax notices is essential for Pakistani taxpayers to comply with legal obligations and avoid penalties. Responding promptly and adequately to tax notices can save taxpayers from unwanted legal complications. We hope this guide will help taxpayers in Pakistan to understand different types of tax notices and their implications.