Proper administration of in-countries tax complicate is vital even to individual taxpayers and businesses. As the Pakistani tax legislation undergoes constant evolution, it’s getting more important to stay in conformity with the Income Tax Ordinance 2001. Another provision which escapes the attention of most taxpayers is mentioned in Section 137 of the Income Tax Ordinance. Also, pertains to due dates and default penalties in case of non-deposit of taxes. It is indeed a mental anguish to receive a 137 Notice from FBR. But if you know what Section137 of FBR and you take the right action in timely manner, you will be saved from huge penalties and surcharges.
This blog delves into Section 137 of the Income Tax Ordinance, defines it and offers some practical tips on how you can prevent being penalized. And whether you yourself are on the payroll, a small-business owner or a corporation, that clarity will empower you to follow the taxes easily.
What is Section 137 of the FBR?
What is Section 137 FBR? At its core,Section 137 of the Income Tax Ordinance outlines the timelines for paying taxes assessed under the Ordinance. This section is enforced by the Federal Board of Revenue (FBR) to impose/satisfy timely deposit of tax liabilities to generate government income. Here is a closer look at some of its biggest components:
Sub section (1): Tax on your taxable income (including minimum tax under Sections 113 or 113A) is due on the filing deadline for your annual return, typically September 30 for salaried individuals and December 31 for others.
About Sub-section (2): Where any tax is payable under an assessment order or an amended assessment order or any other order issued by the Commissioner under this Ordinance, a notice shall be served upon the taxpayer in the prescribed form specifying the amount payable and thereupon the sum so specified shall be paid within [thirty] days from the date of service of the notice.
Sub-section (4):Upon written application by a taxpayer, the Commissioner may, where good cause is shown, grant the taxpayer an extension of time for payment of tax due [under sub-section (2)] or allow the taxpayer to pay such tax in instalments of equal or varying amounts as the Commissioner may determine having regard to the circumstances of the case.
Summarizing Sub-section (6):The grant of an extension of time to pay tax due or the grant of permission to pay tax due by instalments shall not preclude the liability for 4 [default surcharge] arising under section 205 from the due date of the tax under subsection 5 [(2)].
Mistakes Leading to Penalties
Misinterpreting or ignoring Section 137 could lead to significant financial costs. So, below are the key factors that contribute to the 137 Notice from FBR. The above are the common triggers of notice for a 137 and what will be penalties on non-filing of return:
- Failure to file or pay tax: Not filing the return and your self-assessed tax becomes due instantly under sub-section (1). This is further strengthened under sub-section (2) in a follow-up analysis.
- Disputed Assessments: A post-audit translates into a Demand Notice. And if they go unpaid for 30 days, surcharges apply.
- Withholding Tax Failures: The provisions of Section 137 with reference to recovery from Companies if they did not deduct or deposit withholding taxes (section 149–155) are both prescribed as well as escalated with penalty for redundant tax deductions.
- Incomplete Records: In the absence of evidence, appealing against notices becomes a never-ending struggle only to extend its liability.
How to Avoid Penalties?
Section 137 penalties of the income tax ordinance are generally able to be avoided through disciplined procedures. Here’s how to safeguard your finances:
File Returns on Time and Accurately
- Mark this date: Salaried employees are required to file by September 30; businesses or employers can file on December 31 (or extension because of notification).
- E-file through FBR’s IRIS portal to reduce the chances of errors. Verify income, deductions and credits inequality generally results in adjusted assessments and 137 Notice from FBR.
Monitor and Respond to Notices Promptly
- Visit IRIS regularly to keep an eye on your inbox; many 137 Notices from FBR go digital before they are issued.
- Check out your last statement to make sure you received the right amount. If incorrect, collect proof (such as payment proof) and reply within the 30-day time.
Seek Extensions Judiciously
If cash flow is a problem, put in writing to the Commissioner asking for an extension or payment to be made by installments under sub-section (4). Offer good reasons, like audited financial statements demonstrating hardship.
Maintain Impeccable Records
Keep both digital and paper copies of the Returns, challans, bank statements and agreements for at least 6 years.
For companies, reconcile monthly withholding taxes and deposits with FBR-authorized banks or through the online source.
Leverage Professional Help
But if you have extensive submissions, hire a tax consultant or chartered accountant. They can head off problems like those from Section 177 audits.
Stay updated via FBR’s website or apps; circulars often clarify interpretations ofSection 137.
Conclusion
Navigating Section 137 of the Income Tax Ordinance doesn’t have to be daunting. What is Section 137 of the FBR and how to save yourself from penalties? Respond fast on an FBR 137 notice and making timely payments part of your regular business practice. You can avert penalties that cut into the hard-earned dividends of your business. It’s becoming easier than ever to comply with especially with FBR processes going digital (through IRIS and e-invoicing mandates). You just need to keep abreast of development and organized.