Notice U/S 114 (4) Of The Income Tax Ordinance, 2001 For Tax Year 2019 – Issue Of
Whereas you have not furnished a Return of Income for the tax year mentioned above, required to be filed under subsection (4) of section 114 of the Income Tax Ordinance, 2001 (XLIX of 2001);
You are, hereby, requested to furnish by 22-04-2025, a Return of Income for the said tax year, in the prescribed form and verified in the prescribed manner;
Please note that failure to comply with any of the terms of this notice may result in a best judgment assessment under subsection 1 of section 121 of the said Ordinance, and may also render you liable to a penalty of Rs.20,000/- or 0.1% of the tax payable in respect of that tax year for each day of default, whichever is higher, under subsection 1 of section 182, or, prosecution under section 191 of the said Ordinance or both.
Understanding FBR Notice 114(4): What to Do If You Receive a Notice to File Return of Income for the Complete Year
Receiving a Notice under Section 114(4) of the Income Tax Ordinance, 2001, from Pakistan’s Federal Board of Revenue (FBR) can be concerning, especially if you’re unsure about your tax obligations or the consequences of non-compliance.
In this blog post guide, we will explain everything you need to know about the 114(4) notice, why you received it, what steps you must take, potential penalties, and best practices for compliance.
What Is a Section 114(4) Notice?
A Section 114(4) notice is a formal communication from the FBR requiring you to file your Return of Income for a specified tax year. This notice is typically issued when you have not filed your income tax return by the due date, or if the FBR finds discrepancies or requires verification of your income and tax status for that year.
Key points about the notice:
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It specifies the tax year for which the return is required.
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It provides a deadline for submission.
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It warns of penalties and legal consequences for non-compliance.
Why Did You Receive a Section 114(4) Notice?
The FBR issues a Section 114(4) notice for several reasons:
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Non-filing: You did not file your income tax return for the specified year within the due date.
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Compliance Check: The FBR wants to verify your income and tax status.
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Discrepancies: There may be inconsistencies in your financial information reported from other sources.
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Random Selection: Sometimes, individuals are randomly selected for compliance checks.
Who can receive this notice?
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Anyone who is required to file a tax return but has not done so.
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Individuals with a National Tax Number (NTN).
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Owners of certain high-value assets (vehicles, property).
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Those with commercial or industrial electricity connections above a certain threshold.
What Should You Do After Receiving a Section 114(4) Notice?
1. Carefully Review the Notice
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Note the tax year in question.
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Identify the deadline for submission.
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Read any specific instructions or requirements mentioned.
2. Gather Required Documentation
Prepare all relevant financial records for the specified tax year, such as:
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Bank statements
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Salary slips
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Invoices and receipts
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Investment records
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Previous tax returns (if any)
3. Prepare Your Income Tax Return
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Use the prescribed forms available on the FBR’s IRIS portal.
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Ensure all income sources, deductions, and tax credits are accurately reported.
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Double-check all calculations and entries.
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For salaried individuals, the Declaration form 114(I) may be suitable.
4. Submit the Return
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Log in to the FBR’s IRIS portal and file your return electronically.
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Submit before the deadline mentioned in your notice.
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Retain the acknowledgment receipt for your records.
What Happens If You Ignore the Notice?
Failing to comply with a Section 114(4) notice can result in serious consequences, including:
Penalties
| Offense | Penalty |
|---|---|
| Failure to file return by due date | 0.1% of tax payable per day of default (max 50% of tax), or minimum Rs. 40,000 if no tax is payable4 |
| Repeated erroneous calculation | Rs. 30,000 or 3% of the tax shortfall4 |
| Failure to maintain records | Rs. 10,000 or 5% of the tax shortfall4 |
Legal Consequences
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Best Judgment Assessment: The FBR may assess your income based on its own estimates, which may not be favorable to you.
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Prosecution: Under Section 191, non-compliance can lead to a fine up to Rs. 50,000 or imprisonment up to two years, or both.
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Additional Penalties: Further penalties may apply for repeated offenses, false information, or failure to maintain records4.
Frequently Asked Questions (FAQs)
Q: I believe I am not required to file a return. Why did I get this notice?
A: The FBR sometimes issues notices based on asset ownership, NTN status, or other financial data. If you believe you’re not liable, you must still respond and provide supporting documentation to avoid penalties23.
Q: What if I miss the deadline in the notice?
A: You may be subject to daily penalties, best judgment assessment, and potential prosecution. It’s crucial to file as soon as possible, even if late.
Q: Can I get help with filing my return?
A: Yes, professional tax consultants and services can assist with preparing and submitting your return, ensuring compliance and minimizing risk of errors.
Step-by-Step Guide: Responding to a Section 114(4) Notice
| Step | Action | Details |
|---|---|---|
| 1 | Read the notice | Note the tax year, deadline, and instructions |
| 2 | Gather documents | Collect income, expense, and asset records |
| 3 | Prepare return | Use FBR forms, ensure accuracy |
| 4 | File electronically | Submit via IRIS portal before the deadline |
| 5 | Retain proof | Keep acknowledgment for records |
Consequences of Non-Compliance: At a Glance
| Offense | Section | Penalty |
|---|---|---|
| Not filing a return | 114, 182 | 0.1% of tax per day (max 50%), min Rs. 40,000 |
| Non-compliance with notice | 191 | Fine up to Rs. 50,000 or 2 years imprisonment, or both |
| False statements | 192 | Fine up to Rs. 100,000 or 3 years imprisonment, or both |
| Concealment of income | 192A | Up to 2 years imprisonment and/or fine |
Best Practices to Avoid Future Notices
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File Returns on Time: Mark tax deadlines and file promptly each year.
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Maintain Accurate Records: Keep all financial documents organized and up to date.
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Stay Informed: Monitor FBR communications and updates on tax laws.
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Seek Professional Advice: Consult tax professionals for complex situations or if you’re unsure about your obligations.
Conclusion
A Section 114(4) notice from the FBR is a serious matter but can be resolved efficiently with prompt action. By understanding why you received the notice, gathering the necessary documents, and filing your return correctly and on time, you can avoid penalties and legal complications. If you need assistance, don’t hesitate to consult a tax professional to ensure your compliance and financial peace of mind.
