A 114(4) Notice from the Federal Board of Revenue (FBR) under Section 114(4) of the Income Tax Ordinance, 2001 is typically issued to a taxpayer requesting them to file their income tax return for a particular year. This notice is sent to individuals or businesses who have failed to submit their annual income tax returns by the prescribed deadline, and FBR is reminding or compelling them to comply.

What You Should Do Upon Receiving a 114(4) Notice:

1. Understand the Purpose of the Notice

• File Your Tax Return: The main purpose of the 114(4) notice is to remind you to file your income tax return for the specified tax year. This notice may be sent if you have missed the filing deadline for submitting your tax return.
• Legal Obligation: Section 114 of the Income Tax Ordinance mandates that every individual, business, or taxpayer in Pakistan must file a tax return, usually by September 30th of the tax year, unless an extension is granted.

2. Review the Notice Carefully

• Due Date: Check the date mentioned in the notice to confirm which tax year it applies to.
• Consequences for Non-Compliance: The notice will likely specify the consequences of not filing your return, including penalties, interest on overdue tax, and other legal actions.
• Deadline for Compliance: The notice will also mention the final deadline by which you need to file your return. If you fail to file by this deadline, you might face additional penalties or legal consequences.

3. File Your Income Tax Return as Soon as Possible

• Gather Documents: Collect all the necessary documents to file your return, such as:
  • Income statements (salary, business, or other income).
  • Tax deduction certificates (if applicable).
  • Receipts or invoices for deductions (e.g., medical, educational, or charitable donations).
  • Bank statements, financial records, and details of any investments or properties.
• Complete the Return: You can file the tax return through the FBR e-filing portal (available on the FBR website). You may need to fill out a Form 114 for your personal income or the relevant form for businesses.
• Seek Professional Help: If you are unsure about how to complete the return or have complicated financial affairs, it’s advisable to consult a tax consultant or chartered accountant to ensure accuracy in your return.

4. Pay Any Due Tax

• Check Tax Liability: If your return results in a tax liability (i.e., you owe taxes), you must make the tax payment by the due date. This is crucial to avoid interest and penalties for late payment.
• Payment Method: You can make payments through the FBR’s online tax payment system or authorized banks.
• Retain Payment Proof: Always keep the proof of payment, as FBR may require it for future reference or verification.

5. Respond if You Believe the Notice is Incorrect

• If You Have Already Filed: If you have already submitted your income tax return for the specified year, but FBR has sent you this notice, ensure that your filing has been received and processed by FBR. Sometimes, filings can be delayed or incorrectly marked as pending.
  • Check the Status: Log in to the FBR e-filing system to check whether your return has been processed or if there was any issue with the submission.
  • Contact FBR: If there is a mistake or if your submission is not showing up in FBR’s records, contact the FBR helpdesk or the relevant tax office and provide them with the evidence of your filing.
• Correct Filing: If you’ve missed the filing deadline or made an error in your return, file a correct return and ensure you make any necessary tax payments.

6. Prepare for Penalties (if applicable)

• Late Filing Penalty: If you are late in filing your return, you may face penalties. FBR may impose a fine, which can increase over time. The penalties can be substantial if you continue to ignore the notice.
• Late Payment Interest: In addition to penalties for late filing, interest may also be charged on any outstanding tax dues. The interest is calculated from the due date of the return until the actual payment date.

7. Monitor Future Filings

• Adhere to Deadlines: To avoid further issues, ensure that you file your future returns on time. The normal due date for tax returns is September 30th of each year, but you can apply for extensions if needed.
• Regular Review: Keep track of your financial documents and income sources to make filing easier and more accurate each year.
• Maintain Records: Ensure that you maintain proper records for your income, deductions, and taxes paid, as these may be required for future reference or audits.

Possible Outcomes:

• No Further Action: If you comply with the notice and file your tax return promptly, FBR will process your return and update your tax status accordingly.
• Penalties: If you fail to file by the extended deadline or fail to respond to the notice, you may face penalties, including monetary fines and interest on unpaid taxes.
• Audit: In some cases, failure to comply with tax obligations may lead to an audit by FBR to investigate your financial records and determine your tax liability.

Conclusion:

A 114(4) Notice from FBR is a reminder to file your income tax return if you have missed the deadline. File your return as soon as possible, paying any taxes due and avoiding further penalties or interest. If you have already filed, check the status with FBR and ensure they have received your return. If needed, seek professional assistance to ensure proper filing and compliance with tax obligations.

You can also read about Got 182(2) (Notice to impose penalty u/s 182 for failure to furnish return u/s 114) from FBR – What should you do?