182(2) (Notice to impose penalty)

SHOW CAUSE 182(2) (Notice to impose penalty u/s 182 for failure to furnish return u/s 114)

 Please refer to the above.

You have failed without reasonable cause to furnish within the time allowed the return of income/wealth statement in
respect of the tax year 2023 which you were required to furnish under section 114 of the Income Tax Ordinance, 2001
(Income Tax Ordinance. 2001),
2. You are requested in pursuance of section 182(2) of the I.T.O. 2001 to show cause as to why penalty as prescribed
under section 182(1)(1) of the I.T.O. 2001 should not be imposed on you on account of non-compliance of statutory
provisions of section 114 of the I.T.O 2001.
Section 182(1)(1) is reproduced as under:-
“3[Such person shall pay a penalty equal to higher of –
(a) 0.1% of the tax payable in respect of that tax year for each day of default; or
(b) rupees one thousand for each day of default:
Provided that minimum penalty shall be —
(i) rupees ten thousand in case of individual having seventy-five percent or more income from salary; or
(ii) rupees fifty thousand in all other cases:
Provided further that maximum penalty shall not exceed two hundred percent of tax payable by the person in a tax year:
Provided also that the amount of penalty shall be reduced by 75%, 50% and 25% if the return is filed within one, two
and three months respectively after the due date or extended due date of filing of return as prescribed under the law;
Explanation.— For the purposes of this entry, it is declared that the expression “tax payable” means tax chargeable on
the taxable income on the basis of assessment made or treated to have been made under section 120, 121, 122 or
122D;]”
3. Please also note that non-filing of return of total income is a statutory responsibility and its noncompliance may also
lead to initiation of criminal proceedings under section 191(1) I.T.O. 2001.
4. Your explanation is required to be filed within due date.

A 182(2) Notice from the Federal Board of Revenue (FBR) refers to Section 182(2) of the Income Tax Ordinance, 2001, which pertains to the failure to file an income tax return. This notice is typically issued when an individual or business has not filed their income tax return despite being legally required to do so.

Click here to read about Got 114(4) (Notice to file Return of Income for complete year) from FBR – What should you do?

What You Should Do Upon Receiving a 182(2) Notice:

1. Understand the Purpose of the Notice

• Non-Compliance with Filing: Section 182(2) is issued to notify taxpayers who have failed to file their income tax return for a particular year. It serves as a reminder or a demand to file the return immediately.
• Penalty for Non-Compliance: The notice might also specify a penalty or consequence for failing to file the return on time. Under Section 182(2), failure to file a return can result in penalties, and the FBR has the authority to impose these penalties for non-compliance.

2. Review the Notice Carefully

• Identify the Tax Year: The notice will mention the tax year for which the return is due. Make sure that it corresponds to the correct year, as the notice might be related to a prior year if you missed the filing deadline.
• Penalty and Interest: Check the penalty amount, if specified, and any interest charges for failing to file on time. FBR may charge a penalty for late filing as well as interest for overdue tax payments.

3. File the Income Tax Return Immediately

• Gather Necessary Documents: To file your tax return, collect the required documents, such as:
  • Income statements (salary, business income, etc.).
  • Tax deductions (if applicable), such as deductions on investment or medical expenses.
  • Receipts, invoices, and other records related to income or expenses.
• E-Filing: Use the FBR e-filing portal (available on the FBR website) to file your tax return. Ensure that all income, deductions, and other relevant information is correctly provided in the return.
• File as Soon as Possible: Don’t delay in submitting the return. The quicker you file the return, the better your chances of minimizing any penalties or interest charges.

4. Pay Any Outstanding Taxes

• Tax Liability: After submitting your return, if there is any outstanding tax liability (i.e., if you owe taxes), make the required payment immediately to avoid further penalties and interest.
• Payment Options: Taxes can be paid through the FBR online tax payment system or at authorized banks.
• Retain Payment Proof: Keep a record of your payment, including the receipt or confirmation number, as you may need to provide proof of payment to FBR.

5. Assess the Penalty

• Penalties for Late Filing: If you file the return after the due date, FBR may impose a penalty. The penalties under Section 182(2) can vary based on the duration of the delay. For example:
  • Late filing penalties can increase over time.
  • Interest charges may also apply on the amount of tax due, based on how long the payment is delayed.
• Pay Penalties Promptly: If a penalty is specified in the notice, pay it along with any outstanding tax. Penalties will generally be calculated based on the number of days your return is overdue.

6. Respond if You Believe the Notice is Incorrect

• File a Return if Not Filed: If the notice is correct and you have not yet filed the return, take immediate action to file the return and pay any dues as instructed.
• If Already Filed: If you have already filed your return but still received the notice, check whether your return was successfully processed by FBR. There may have been an issue with your filing or a delay in processing.
  • Log into the FBR e-filing system and check the status of your return. If your return is not showing as filed, contact FBR and provide any supporting documents or proof of filing.
• Seek Professional Help: If you’re unsure about the reason for receiving the notice or if you face difficulties resolving the issue, consider seeking assistance from a tax consultant or chartered accountant.

7. Submit a Revised Return (if applicable)

• Correct Any Errors: If you discover that there was an error in your previously filed return (e.g., omission of income, wrong deductions), you can amend the return and submit a revised return to FBR.
• E-File the Amended Return: Use the FBR e-filing system to make corrections or adjustments and submit the revised return along with any tax payment if required.

8. Monitor Future Compliance

• File on Time Going Forward: Ensure that you file your tax return on time in subsequent years to avoid receiving further notices and penalties. The normal due date for tax returns is September 30th of each year (unless an extension is granted).
• Set Reminders: Set reminders for filing deadlines or work with a tax consultant to help you stay on track.
• Maintain Accurate Records: Keep comprehensive records of your income, expenses, and tax-related documents throughout the year to make future tax filing easier.

Possible Outcomes:

• No Further Action: If you comply with the notice and file your return and pay any taxes due, FBR will process your return, and the matter will be closed.
• Penalties: If you fail to file the return or pay any taxes due after receiving the notice, you may face penalties and interest for late filing and payment.
• Audit: In some cases, repeated non-compliance can trigger a tax audit, where FBR may scrutinize your finances in detail.

Conclusion:

A 182(2) Notice from FBR is a formal reminder or demand to file your income tax return if you have failed to do so. To resolve the notice:

1. File your return as soon as possible through the FBR e-filing system.
2. Pay any taxes due to avoid penalties and interest.
3. Ensure future compliance by filing returns on time and maintaining accurate financial records. If you’re unsure about how to proceed, consider seeking help from a tax consultant or chartered accountant.