FBR Implements Strict Penalties for Undeclared Business Bank Accounts

[Islamabad], [September 18] – In an attempt to strengthen tax compliance and revenue collection, the Federal Board of Revenue (FBR) has cracked down on individuals who have failed to declare their business bank accounts. learns the recent reports that suggest that the FBR Implements Strict Penalties for Undeclared Business Bank Accounts. The FBR, Pakistan’s federal taxation authority, has made it plainly clear that declaring business bank accounts is a must-to-do for individuals engaged in business transactions. To ensure implementation to this regulation, the FBR has started imposing relevant provisions of tax laws and initiated stringent penalties against secretive clandestine businesses. This law will be for those who have not declared their business bank accounts.

What will be Consequences on Violation

Sources within the FBR reveal that the authority’s directive outlines severe consequences for non-compliance. It specifies that any person who doesn’t comply with declaring will be penalized. Though, their business bank account(s) in their registration application or intentionally fails to amend their registration profile to declare existing business bank account(s) will face penalties.

Introductory Penalties

Under the new directive, individuals found in violation of this rule will be liable to pay a penalty of Rs. 10,000 for each day of default. The counting begins either from the date of submission of their registration application or the date of opening the undeclared business bank account, depending on which is later. However, a notable provision is that if the calculated penalty for each undeclared bank account is less than Rs. 100,000, the individual must still pay a substantial penalty of Rs. 100,000 for each undeclared business bank account.

Pre Impact of the Law

It’s crucial to emphasize that this provision has been in effect since October 1, 2021. This means that taxpayers have had ample time to update their registration forms and declare their business bank accounts. The definition of a business bank account, as per Section 114A of the Income Tax Ordinance, 2001, stipulates that every taxpayer must declare to the Commissioner the bank account they use for business transactions. The declaration process for a business bank account can be completed through the original or modified registration form, as prescribed under Section 181 of the Ordinance.

Why Does FBR Bring This Law

This move by the FBR aligns with the broader global trend. Of increasing transparency in financial transactions and cracking down on tax evasion. It indicates the government’s commitment to bolstering its revenue collection efforts and ensuring a level playing field for all taxpayers.

Advice For Stakeholders

As the FBR intensifies its efforts to enforce tax compliance. Individuals engaged in business transactions are strongly advised to review their registration forms. This way, they can declare their business bank accounts to avoid facing hefty penalties. Failure to do so may lead to severe financial consequences and legal repercussions.

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