AUDIT, PENALTY ON LATE FILERS: Honest taxpayers are just idiot; FBR proves it?


(Pkrevenue analysis)
“The honest taxpayers are just idiots.” This has been noted by Tax Reform Commission (TRC) in its report submitted to finance ministry in May 2015 while referring to amnesty schemes announced by the government for looters and plunderers.




“After every other year, the rulers announce a tax amnesty scheme to prove that the honest taxpayers are just “idiots”,” quoted by the TRC in its report.

Apparently the FBR proved it as a true because thousands of income tax return filers, mostly salaried persons, have been served notices for delaying in compliance on due date.

The filed offices of FBR has issued thousands of notices to late filers in pursuance to Section 231E of Income Tax Ordinance, 2001, which was introduced through Finance (Supplementary) Act, 2018, by the present government.

The Section 231E has been introduced in order to close audit that were selected through deleted Section 214D of the ordinance.

In order to promote income tax return filing, the government through Finance Act, 2015 introduced Section 214D, under which the non-filers and late filers would be subject to automatic selection of audit.

Interestingly, the FBR is focusing on late filers as those are soft target and in the documented economy.

Some salary persons have approached pointing out that they had received audit notices from various Regional Tax Offices (RTOs) because they had filed income tax return with only one day delay.

The salary persons are around 70 percent of total income return filed with the FBR. The salary persons are most compliant taxpayers because they have no other option as their income deducted at source by employers.

Today those salary persons who had become return filers in previous years on appeal from the FBR are regretting while receiving audit notices just for late filing the return.

The FBR is asking the late filers to pay minimum penalty so their audit cases would be closed. The penalty as per Section 182 of the Ordinance is around Rs20,000. In case of late filing of income tax return, the section says: “Such person shall pay a penalty equal to 0.1 percent of the tax payable in respect of that tax year for each day of default subject to a maximum penalty of 50 percent of the tax payable provided that if the penalty worked out as aforesaid is less than twenty thousand rupees or no tax is payable for that tax year such person shall pay a penalty of twenty thousand rupees.”

The tax exempt income from salary is Rs400,000. It means Rs400,001 is subject to tax. In case a person having this amount as annual salary and unable to file return by due date and unfortunately he submitted return after due date then a penalty of Rs20,000 is payable by him when his total payable tax is zero.

According to estimates over 4 million NTN holders are in the country and each NTN holder is required to file income tax returns and only 1.4 million people filed return, including of those filed after due date. It means 2.6 million automatically selected for audit, which would be an impossible task for the FBR. Therefore, it was easy task to penalize people for filing returns.

Further, the government recently announced an amnesty for local and domestic undisclosed assets for looters and plunderers. Why the amnesty was granted to those evaders? Because the FBR is unable to apprehend those people due to political influence or otherwise.

In case of corporate entities when FBR issues notices for audit they usually move to courts through filing suits or petitions. But in case of salary people they have no voice and therefore they are soft target for the FBR to show their performance.

It is established that FBR is not interested in encouraging people to attract people in the tax net.

On the other side presently the taxpayers are thinking: Is TRC is right saying “the honest taxpayers are just idiots”?

Copyright © Pakistan Revenue

  • Salaried class people are already paying tax & receive salary after deduction of tax. Late filing of return has no financial impact on govt revenue. Then why FBR is discouraging salaried class instead of taking into account non-filers & looters who are actualy harmful for our country. What a foolish decision by fbr. Shame on it….

  • I was about to file my returns for the first time, had already met a tax consultant. But after reading this I am not gonna do this mistake. It better to loot and then avail amnesty scheme in this
    country rather than being a honest tax payer.

  • Sending Audit notices to govt salary persons is against norms of justice, their only fault was that they are late filers although their tax ia deducted timely at source and deposited in the govt. exchequer. This will create a very bad image for the new govt and will discourage new tax payers.

  • Lets start a campaign on social media “Bycott FBR”, I am pretty much hopeful that it will work, spread it to all

  • Bro, these all are looters and culprits, in fact FBR don’t want to implement any reforms in its department, thats why every day they come up with new strategy to increase problems in taxation system of Pakistan, and to start a new debate, so our PM Imran Khan don’t object their performance. In fact FBR’s machinary is very old and they are not capable of any kind of improvement.

  • Audit notices should be withdrawn for salaried and exempt / final tax,/ nil return filers. At one point, FBR has been appealing to increase tax filer base base, however through, such notice, fbr is blackmailing innocent genuine tax payer.

  • i have become a laughing stock in my friends and family due to the fact that i was the one advocating tax filling to everyone and now i have received the notice and none of my non filer friends have.

  • The Big question is for all of us how to get of this mess. We can’t just surrender to unjust and keep on baring all this for no good reason. We pay tax which is deducted from our salaries whether we like it or not to pay for all these politicians and other government officials salaries and expense. I have studied the ordinance with amendments under finance act 2001. We must report this as an act of deliberate trap for the first time filler specifically. There are no disclosure to inform any individual to be informed if they have failed to file previous year return no matter what they shall be still penalized. And furthermore we should also start a social viral messaging that the FBR has no lienenacy for the first time filler and since someone has failed to to file returns previously should not file returns ever. This will let them know that the voice of public is has more than few sitting in offices and make decisions on behalf of us. I have already emailed Supreme Court please all do your bit. Thanks and all the best

  • Rightly said Filers are idiots ….. Rightly felt by all of us who always paid tax from the day we earned first penny beyond tax slab and facing audit notices

  • Salaried individuals like us are getting notices to bring record for previous three tax periods. I feel it was my greatest fault to submit my returns, as I got notices just one week after submission of return. Instead of encouragement, these moves discourage the taxpayers like us. FBR’s main objective should be to broaden taxpayers list, by serving notices to non filers (remaining ntn holders in their database) first, rather to serve notices to salaried persons, whose only mistake is that they submitted their returns. I personally feel that FBR should be dissolved and Govt should bring IT based one window system. A taxpayer may submit taxes anywhere in Pakistan & same should be reflected in FBR portal. The worst situation now a days that provincial authorities serve notices separately and FBR separately. Recently I gaced issue with SRB, where they said that they have nothing to do with FBR and I should pay GST on supplies to SRB. everyday a notice with the caption that last year in particular month you paid higher tax and this year little tax, which means that you have supressed your supplies and this leads to legal action against you. I mean this practice is totally ridiculous and bullshit. FBR is full of corrupt officers and in my opinion there will be no change until or unless FBR should be dissolved OR change should be made at Inspector / Auditor level, as these are mainly looters. If somebody highlights issue or speaks up then this mafia keep an eye on him for all his future.

  • Even people who were jobless and had no income like me have received notices. FBR always go after poor and law-abiding taxpayers. This move will further discourage people to file their returns.

  • Yes, late filler must be pushished coz he is idiot, why he file the return. I say loot the late filler, kill him. Dear, there is a difference between use and abuse, kindly use tax payer money don’t abuse tax payer.

  • But if any one is filling return for first time then they should not be penalized by penalty of late filing

  • Delay Income Tax Return filing even by ONE day YES is an offence, because it is the history that FBR used to extend filing dates even by months even than if someone file delayed even with one day does not need sympathy.