Key Takeaways
- FBR proposes new rules allowing late tax returns without surcharge.
- Taxpayers must submit an undertaking not to acquire property for six months.
- FBR retains the right to verify compliance and withdraw benefits if breached.
The Federal Board of Revenue (FBR) has proposed new rules that allow individuals who file their income tax returns after the due date or extended deadline to be included in the Active Taxpayers’ List (ATL) without paying the prescribed surcharge. This concession is subject to a six-month restriction on acquiring ownership or beneficial interest in any property.
The new rules were issued on Tuesday through SRO1690 of the Income Tax, as draft amendments to the Income Tax Rules 2002. The FBR sought feedback from all stakeholders within one week before finalising them.
Under the proposed rule 81B, a new rule (2B) is proposed that provides that an individual who files an income tax return for the latest tax year after the due date or the extended deadline will be eligible for inclusion in the ATL without payment of the surcharge if the taxpayer submits an undertaking through the FBR’s Inland Revenue Information System (IRIS) portal.
The six-month restriction will begin from the date appearing on the electronic acknowledgement generated by IRIS after successful submission of the newly prescribed Form ATL-U. The FBR may use information available under the Income Tax Ordinance as well as information received from any authority, agency, registry, financial institution or other lawful source to verify compliance.
If information available with the tax authorities shows that an individual acquired ownership or beneficial interest in a property during the six-month period, the taxpayer will first be provided an electronic opportunity of being heard. During the hearing, if the breach is established, the benefit of surcharge-free inclusion in the ATL will be withdrawn from the date of the violation. The taxpayer’s subsequent status on the ATL will then be governed by the existing provisions applicable to late filers.
The FBR has also proposed a new undertaking Form ATL-U for taxpayers seeking to avail themselves of the facility. The form will require the individual’s name, CNIC or NTN, tax year, date of filing the return, IRIS acknowledgement or reference number and the date on which the undertaking is furnished.
IRIS will electronically verify the undertaking. The proposed rules are aimed at encouraging taxpayers to file their returns on time while ensuring compliance with tax laws. The FBR’s move is seen as a pragmatic approach to address the issue of late filings without imposing additional financial burdens on taxpayers.
