Got 111(1) Notice from FBR – What should you do?

111(1) (Notice to explain Income / asset)

Please refer to above.

1.            You have declared income including exempt and FTR at Rs. 3,017,483/- for the tax year under consideration whereas amount of the credit entries in the bank accounts maintained by you are as under:-r.A/c No.      Name of Bank(branch)     Amount of credit entries

01.                          30085X9XX2                        NBP                                       Rs. 3,487,671/-

02.                          0113XXXX12012                Albaraka Bank   Rs. 5,542,684/-

                           Total                                                                                          Rs. 9,030,355/-

You are requested to please explain the nature & source of Rs. 9,030,355/- (-) Rs. 3,017,483/- (=) Rs. 6,012,872/-. Please note that in case of non-compliance or unsatisfactory reply, the said amount will be added in your taxable income under the head income from other source u/s 111(1) (a) of the Income Tax Ordinance, 2001.

you may receive this in e-mail

When Do You Receive a Section 111(1) Notice from FBR?

You receive a Section 111(1) notice from the Federal Board of Revenue (FBR) in Pakistan when the tax authority suspects that you have unexplained income or assets. This typically occurs when:

1. The FBR identifies discrepancies between your declared income and your apparent lifestyle or assets.
2. There are significant unexplained deposits in your bank accounts.
3. You have made large investments or purchases that don’t align with your declared income.
4. The FBR has received information about undeclared assets or income from third-party sources.

Why Did You Get a Section 111(1) Notice from FBR?

The primary reasons for receiving a Section 111(1) notice include:

1. Undeclared Income: The FBR suspects you have income sources that you haven’t reported in your tax returns.
2. Concealed Assets: You own assets that aren’t reflected in your tax declarations.
3. Discrepancies: There are significant inconsistencies between your declared income and your apparent financial status.
4. Third-Party Information: The FBR has received information about your finances from other sources that doesn’t match your tax records.

What Should You Do After Receiving a Section 111(1) Notice from FBR?

1. Understand the Notice

• Review the notice carefully, noting unexplained income/assets, tax year(s) in question, deadline, and instructions.

2. Gather Necessary Documentation

• Collect financial records, including bank statements, property documents, investment records, previous tax returns, and other substantiating documents.

3. Prepare Your Explanation

• Draft a detailed explanation for each item, clearly stating the source of the income/assets, supported by evidence.

4. Compile Supporting Evidence

• Organize documents such as contracts, sale deeds, gift documentation, inheritance papers, and loan agreements.

5. Respond to the Notice

• Submit your explanation and supporting documents through the FBR’s IRIS portal or as instructed, within the specified timeframe.

6. Seek Professional Assistance if Needed

• Consult a tax advisor for complex cases to ensure a comprehensive and legally sound response.

Receiving a Section 111(1) notice from the FBR is serious and requires immediate attention. By understanding the notice, gathering documentation, providing a clear explanation, and responding promptly, you can address FBR’s concerns and potentially avoid penalties.

At ABH Consultants Islamabad, we specialize in assisting with complex tax matters, including responding to FBR notices. Contact us for expert assistance in managing your tax compliance and securing your financial peace of mind.

Reach out to help if you are unable to file your Tax Returns Properly