FBR issues notices to salaried class late filers

ISLAMABAD: The FBR has issued tax notices to hundreds of thousands late filers of salaried class for the last three years through automatic selection of audit, and, now the Board has offered them to come out from audit by paying a penalty of Rs20,000 or higher than tax amounts till December 31, 2018.

The FBR has explained that the late filers will have to pay the penalty as it cannot be waived off under the Income Tax law. The FBR has issued notices to salaried class in all major cities except Rawalpindi where the relevant Income Tax commissioner did not send out notices knowingly that it might trigger a controversy at the highest levels.

The FBR said on Thursday that the government facilitated the taxpayers by providing them a one-time option for closing the audit proceedings due to late filing of returns through the Finance Supplementary (Amendment) Act, 2018.

In an official statement, the FBR has strongly denied news reports in a section of the prin media accusing the taxation authorities of harassment of late filers, especially, salaried individuals. The assertion by the media that the FBR is pressurising taxpayers for additional revenue through recovery of penalties reveals a lack of understanding about tax laws and their true intent.

The FBR has clarified that an amendment in income tax law made through Finance Act, 2015, by the previous government provided for automatic selection for audit if a person had not filed return of income by the due date stipulated under the law. Through Finance Act, 2018, this amendment was withdrawn; however, the cases that were automatically selected under the said provision prior to its withdrawal were still to be audited. This created a lot of problems for the taxpayers and also resulted in a large pendency of audit cases. Therefore, in order to facilitate the taxpayers, the present government, provided a one-time option to the taxpayers for closing the audit proceedings due to late filing of returns through the Finance Supplementary (Amendment) Act, 2018.

Under the Finance Supplementary (Amendment) Act, 2018, taxpayers were provided an option to get their audits closed on the payment of either 25% higher taxes than the tax paid with the return or in case no tax was payable 2% of the turnover and to file revised return by 31-12-2018. The salaried individuals whose cases were selected for audit due to late returns were facilitated by exempting them from the requirements of paying 25% higher tax and filing revised returns for closure of their audit cases. They, however, had to pay only the penalty on account of delay in filing of return in order to get their audit cases closed. It is worth mentioning that the previous government had fixed the minimum penalty for late filing of return at Rs20,000 through the Finance Act, 2013, and no change has been made by the present government.

It is imperative to understand that the penalty proceedings are independent from audit which will be applicable regardless of whether the taxpayer avails the benefit under the above mentioned provision of the Finance Supplementary (Amendment) Act, 2018, or not.

That is to say that even if the taxpayer chooses not to conclude its audit proceedings he or she would have to pay the tax charged as a result of audit proceedings as well as the penalty for late filing which, as mentioned before is an independent provision applicable on persons who were obliged to file their returns but filed the returns late. The present government tried to facilitate the salaried taxpayers by providing a one-time option to avoid additional tax liability under the audit proceedings, the FBR statement concluded.