NBR not to reduce penalty for tax returns defaulters

DOT Desk
Income taxpayers will not get scope for paying penalty in reduced rate anymore for not filing income tax returns, National Board of Revenue said, reports The New Age.
According to a clarification issued by income tax wing of NBR on December 17, tax officials get no authority to reduce the amount of applicable penalty prescribed in the Income Tax Ordinance-1984 for failure in filing tax returns by taxpayers.
According to article 124 of the ordinance, a deputy commissioner of tax may impose penalty amounting to 10 per cent of tax imposed on last year’s income of the taxpayer or Tk 1,000, which one is higher, for his/her failure in filing returns.
A DCT will also impose a further Tk 50 in penalty for each day delay after the deadline. For new e-TIN holders, the penalty amount will be at the highest Tk 5,000 for their failure in filing tax returns, according to the ordinance. In case of old individual taxpayer, penalty amount will be 50 per cent of last year’s payable tax or Tk 1,000, whichever is higher. According to NBR officials, the rate of penalty is set by law and no tax official has authority to reduce the amount.
A DCT can impose the penalty after issuing notice and giving an opportunity of hearing to taxpayers, they said.
DCT may not impose the penalty at all if he or she becomes satisfied on reasons given by the taxpayers for his/her failure in filing tax returns on time.
But tax officials at any stage including at Taxes Appeal Zone and Taxes Appellate Tribunal cannot reduce the amount of penalty, the officials said.
According to the clarification issued to its field offices, NBR has recently noticed that officials at appeal stage have been reducing the amount of penalty imposed by a DCT, which is not lawful at all.
Appeal authorities can set aside only that orders of DCTs which were given without issuing prior notice or ignoring the logical reasons showed by taxpayers for his/her failure in filing returns, it said.
Otherwise, appeal authorities don’t have power to reduce or exempt the imposed penalty, it added.
According to NBR, the number of electronic taxpayers’ identification number holders crossed 38.16-lakh mark by November 30, the last date of tax returns submission this year.
Of which, only 16.92 lakh e-TIN holders filed their tax returns by the deadline which was extended up to December 2 this year, while another 3.15 lakh submitted petitions to NBR seeking additional time for filing their returns.
Officials said usually field offices did not impose the penalty if the taxpayers voluntarily submitted the returns.
But, whenever they impose the penalty on wilful defaulters after tracing them, they (defaulting taxpayers) file appeal with the NBR appeal authorities against the penalty amount.
In many cases, appeal officials either reduced or completely scrapped the penalty amount, officials said.
These incidences have encouraged wilful defaulters to avoid filing tax returns, they added.