FBR issues notices to companies for tax recovery

KARACHI: Tax offices on Monday started issuing notices to corporate taxpayers for imposing penalties for non-filing of returns and recovery of undeclared income for the tax year 2020.

Sources in Medium Taxpayers Office (MTO) Karachi said a large number of corporate taxpayers had failed to discharge their liability in filing of income tax returns and payment of the due amount of duty and taxes.

“The notices have been issued for recovery of penalty for non-filing of income tax returns and defaulting payment of income tax,” an official at the MTO Karachi said. The MTO official said through centralised system the FBR had already issued notices for penalty under a section 182 of the Income Tax Ordinance 2001. Through the notification, the FBR directed all the heads of tax offices to monitor progress of penalty proceedings particularly in company cases and make sure enforcement of returns and also realize due revenue.

The Federal Board of Revenue (FBR) last week circulated a notification showing concerns over low number of corporate returns filed for tax year 2020. “A large number of companies have not filed returns for tax year 2020. The data obtained from PRAL in respect of non-filer companies, which were filers for tax year 2019, revealed that they had not field tax returns and a considerable amount of revenue had not been paid.” Under tax laws every company registered with the Securities and Exchange Commission of Pakistan are required to file their annual return.

The FBR issued around 1.4 million notices in total to non-filers for tax year 2020 and those who filed their returns but had mis-declared their assets and income. As usual, the FBR failed to introduce the return form for tax year 2020 on time, which resulted in extension in the last date of return filings.

The FBR couldn’t issue returns form for the tax year 2020 till August leading to extension in deadline from September to December. The FBR received 1.8 million returns until the last date as compared to 1.73 million returns filed in the corresponding period of tax year 2019. The FBR has received around 3 million income tax returns for tax year 2018 and around 2.75 million for tax year 2019, which would increase due to mandatory requirement for availing reduced rate of withholding tax.