As a leading tax consultancy in Islamabad, ABH Consultants is committed to keeping our clients informed about the latest developments in Pakistan’s tax landscape. The recent Finance Bill 2024 has introduced a significant change that all taxpayers should be aware of: the new “Late Filer” category. Let’s break down what this means for you and your tax obligations.
Understanding the New “Late Filer” Category
Previously, the Federal Board of Revenue (FBR) classified taxpayers as either Filers or Non-Filers. The Finance Bill 2024 has now introduced a third category: Late Filers. This new classification is designed to encourage timely tax return submissions and comes with several important implications.
Key Points to Note
Higher Tax Rates
Late Filers will face increased withholding tax rates compared to regular Filers. For instance:
- Property transactions: Late Filers will pay up to 8% tax on properties valued over Rs 100 million, double the 4% rate for regular Filers. Read More about Property Taxes in 2024
- Capital gains: A flat 15% tax rate applies to Late Filers on gains from immovable property acquired after July 1, 2024, regardless of the holding period.
Penalties and Surcharges
To regain Active Taxpayer List (ATL) status, Late Filers must pay a surcharge (Read about how to pay ATL surcharge):
- Rs. 1,000 for individuals
- Rs. 10,000 for Associations of Persons (AOPs)
- Rs. 20,000 for companies
Additionally, a minimum penalty of Rs. 1,000 per day applies for late filing.
Impact on Compliance
These measures aim to promote timely tax return submissions. By creating financial disincentives for late filing, the FBR hopes to improve overall tax compliance and increase the number of active taxpayers in Pakistan.
How to Avoid Late Filer Status
Very important to note!
If you file your tax return for the first time for the tax year 2023, you will be considered a “late filer” until February 28, 2025. However, starting March 1, 2025, you will be recognized as a “filer,” provided that you submit your tax return for the tax year 2024 on time, that is, by or before September 30, 2024.
To maintain your status as an active filer and avoid the new penalties:
- Mark your calendar: Be aware of tax return deadlines and plan accordingly.
- Gather documents early: Start collecting necessary financial records well in advance.
- Seek professional help: If you’re unsure about the filing process, don’t hesitate to consult with tax experts like ABH Consultants.
At ABH Consultants, we’re here to help you navigate these new regulations and ensure your tax compliance. Our team of experienced professionals can assist you in filing your returns on time, avoiding Late Filer status, and optimizing your tax strategy.
Remember, timely compliance not only saves you money but also contributes to the economic growth of Pakistan. Stay proactive with your tax obligations, and don’t hesitate to reach out to us for any tax-related queries or assistance.
Click here to check the documents needed to file your tax return properly (Salaried Individual)
FAQs
What is the new “Late Filer” category?
The “Late Filer” category, introduced in the Finance Bill 2024, is a classification for taxpayers who submit their tax returns after the due date. This category carries higher tax rates and penalties to encourage timely filing.
How can I avoid becoming a Late Filer?
To avoid becoming a Late Filer, ensure you submit your tax returns on time, gather your documents early, and consider seeking professional help from tax consultants.
What are the penalties for Late Filers?
Late Filers must pay a surcharge to regain ATL status: Rs. 1,000 for individuals, Rs. 10,000 for AOPs, and Rs. 20,000 for companies. Additionally, a minimum penalty of Rs. 1,000 per day applies for late filing.
Contact Us
For expert consultation, reach out to ABH Consultants.