ISLAMABAD: The Senate Standing Committee on Finance has approved a proposal to impose penalties on taxpayers who falsely claim excessive tax credits in their income tax returns, as authorities move to tighten tax compliance measures.
During a committee meeting, officials from the Federal Board of Revenue (FBR) informed lawmakers that individuals found claiming tax credits beyond their entitlement would face a penalty equal to the amount of the excess credit wrongly claimed.
The committee also reviewed proposals related to the Active Taxpayers List (ATL), with FBR officials suggesting that taxpayers who fail to meet filing requirements within the prescribed timeline should not be included in the list.
Officials further proposed significant increases in surcharges for late filing of tax returns. Under the new proposals, companies filing returns after the due date would have to pay a surcharge of Rs100,000, compared with the existing Rs25,000. For Associations of Persons (AOPs), the surcharge would rise from Rs10,000 to Rs50,000, while individual taxpayers would face a surcharge of Rs25,000 instead of the current Rs1,000.
The FBR also proposed withholding tax refunds from taxpayers during the period they remain excluded from the Active Taxpayers List.
Committee members, however, expressed concerns over the proposed penalties and suggested extending the grace period for filing returns to three months. Lawmakers argued that taxpayers could face genuine difficulties, such as illness or bereavement, which might prevent them from filing returns on time.
Members noted that imposing penalties before providing reasonable flexibility could create hardships for compliant taxpayers facing exceptional circumstances.
Responding to the concerns, an FBR member said the tax authority is considering stricter measures against both filers and non-filers to improve compliance and broaden the tax base.
The official added that taxpayers who fail to comply with FBR notices could face substantial penalties. A fine of Rs1 million has been proposed for a first violation, while repeat offenders may be subject to penalties of up to Rs2 million.