The government has massively raised penalties for different offences under Finance Bill, 2019 including concealment of income (minimum penalty increase from Rs 25,000 to Rs 100,000), non-filing of return (minimum penalty Rs 40,000) and erroneous calculation in return (minimum penalty Rs 30,000). Through Finance Bill 2019, the FBR has revised penalty regime under section 182 of the Income Tax Ordinance 2001.
According to the new penalties, where any person fails to furnish a return of income as required under section 114 within due date, if the penalty worked out is less than Rs 40,000 or no tax is payable for that tax year such person shall pay a penalty of Rs 40,000 under the proposed law. Presently, if the penalty worked out as aforesaid is less than Rs 20,000 or no tax is payable for that tax year such person shall pay a penalty of Rs 20,000.
Where any person fails to furnish wealth statement or wealth reconciliation statement, such person shall pay a proposed penalty of 0.1% of the taxable income per week or Rs 100,000 whichever is higher. Presently, such person shall pay a penalty of 0.1% of the taxable income per week or Rs 20,000, whichever is higher. Any person who is required to apply for registration under Income Tax Ordinance but fails to make an application for registration, such person shall pay a penalty of Rs 5000. Under the proposed law, such person shall now pay a penalty of Rs 10,000.
Any person who repeats erroneous calculation in the return for more than one year whereby amount of tax less than the actual tax payable under this Ordinance is paid, under the proposed law such person shall pay a penalty of Rs 30,000 or 3% of the amount of the tax involved, whichever is higher. Presently, such person shall pay a penalty of Rs 25,000 or 100% of the amount of tax involved, whichever is higher.
Where a person has concealed income or furnished inaccurate particulars of such income, including but not limited to the suppression of any income or amount chargeable to tax, the claiming of any deduction for an expenditure not actually incurred or any act referred to in sub section (1) of section 111, in the course of any proceeding under this Ordinance before any Income tax authority or the appellate tribunal, such person shall pay a penalty of Rs 100,000 or an amount equal to the tax which the person sought to evade whichever is higher. Presently, such person shall pay a penalty of Rs 25,000 or an amount equal to the tax which the person sought to evade whichever is higher.
Under the proposed regime, such person shall pay a penalty of Rs 100,000 or an amount equal to the tax which the person sought to evade whichever is higher.
Any person who fails to collect or deduct tax as required under any provision of Income Tax Ordinance or fails to pay the tax collected or deducted as required under section 160, Such person shall pay a proposed penalty of Rs 40,000 or the 10% of the amount of tax whichever is higher. At present, such person shall pay a penalty of Rs 25,000 or the 10% of the amount of tax whichever is higher.
Where a person has concealed income or furnished inaccurate particulars of such income, including but not limited to the suppression of any income or amount chargeable to tax, the claiming of any deduction for an expenditure not actually incurred or any act referred to in sub section (1) of section 111, in the course of any proceeding under this Ordinance before any Income tax authority or the appellate tribunal, such person shall pay a penalty of Rs 100,000 or an amount equal to the tax which the person sought to evade whichever is higher, any person who fails to collect or deduct tax as required under any provision of this Ordinance or fails to pay the tax collected or deducted as required under section 160, such person shall pay a penalty of Rs 40,000 or the 10% of the amount of tax whichever is higher. Moreover, the FBR has also proposed some new penalties through Finance Bill 2019-20 tabled before the Parliament.
The Finance Bill 2019-20 proposed that any person who purchases immovable property having fair market value greater than rupees five million through cash or bearer cheque, such person shall pay a penalty of five percent of the value of property determined by the Board under subsection (4) of section 68 or by the provincial authority for the purposes of stamp duty, whichever is higher.
Where an offshore tax evader is involved in offshore tax evasion in the course of any proceedings under this Ordinance before any Income Tax authority or the appellate tribunal, such person shall pay a penalty of one hundred thousand rupees or an amount equal to two hundred per cent of the tax which the person sought to evade, whichever is higher.
Where in the course of any transaction or declaration made by a person an enabler has enabled, guided, advised or managed any person to design, arrange or manage that transaction or declaration in such a manner which has resulted or may result in offshore tax evasion in the course of any proceedings under this Ordinance, such person shall pay a penalty of three hundred thousand rupees or an amount equal to two hundred per cent of the tax, which was sought to be evaded, whichever is higher.
Any person who is involved in asset move as defined in clause (5C) of section 2 of the Ordinance from a specified territory to an un-specified territory, such person shall pay a penalty of one hundred thousand rupees or an amount equal to one hundred per cent of the tax whichever is higher.
Where a Reporting Financial Institution fails to comply with any provisions of section 165B of the Ordinance or Common Reporting Standard Rules in Chapter XIIA of Income Tax Rules, 2002, such Reporting Financial Institution shall pay a penalty of Rs 10, 000 for each default and an additional Rs 10,000 each month until the default is redressed.
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