Penalties, Offences & Prosecutions

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 Offences & Penalties

Any person who commits any offence specified in Income Tax

Ordinance 2001 shall be liable to the penalty mentioned against that
offence in section 182 of the Ordinance.

[Section 182]
 Reference to Section of
Sr. offences Penalties
Offence

0.1% of the tax payable for each day of default

max 50% of tax payable
Failure to Furnish Return of
1 Income if the penalty is less than 40,000 or no tax is 114 [and 118]
payable for that tax year such person shall pay
a penalty of 40,000 rupees

PKR 5000 if tax paid within due date and

statement furnished within 90 days
1A Failure to Furnish a 165, 165A & 165B
Statement In all other cases, a penalty of Rs.2,500 for
each day of default from the due date subject
to a minimum penalty of Rs.10,000

0.1% of the taxable income per week

1AA Failure to Furnish Wealth or PKR 10,000 114 & 116
Statement
(whichever is higher)

Failure to Furnish Foreign 2% of the foreign income or value of the

1AAA Assets & Income Statement foreign assets for each year of default. 116A
 Reference to Section of
Sr. offences Penalties
Offence

3 Failure to apply for PKR 10,000 181

Registration

Failure to Notify Material

4 PKR 5,000 181
Changes

5% of Tax due
5 Failure to Deposit Tax 25% of Tax due (2nd Default) 137
50% of Tax due (3rd & subsequent Default)

Repeat Errorenous PKR 30,000

6 Calculations or 3% of the tax involved 137
whichever is higher

Failure to Maintain required PKR 10,000

7 or 5% of the tax 174 [108]
Records
whichever is higher

Failure to Provide Required PKR 25,000 (1st Notice)

8 PKR 50,000 (2nd Notice) 177
Documents
PKR 100,000 (3rd Notice)
 Reference to
Sr. offences Penalties
Section of Offence

PKR 25,000 (1st notice)

9 Failure to Furnish Information 176
PKR 50,000 (2nd notice)

Making False or Misleading Statements

a) in writing or orally or electronically including a

statement in an application, certificate, declaration,
notification, return, objection or other document
including books of accounts made, prepared, given,
filed or furnished
PKR 25,000
or 114, 116, 174,
10 100% of Tax shortfall
b) furnishes or files a false or mis-leading information 176, 177
or document or statement to an Income Tax Authority (whichever is higher)
either in writing or orally or electronically

c)omits from a statement made or information

furnished to an Income Tax Authority any matter or
thing without which the statement or the information
is false or misleading in a material particular.
Sr. offences Penalties Reference to Section
of Offence

PKR 50,000
11 Denying the Access to Premises & Accounts or 100% of the Tax involved 175 & 177
(whichever is higher)

PKR 100,000
Concealing or Providing inaccurate Income
12 or amount that was sough to evade 20 & 111
Particulars
(whichever is higher)

13 Obstructing Income Tax Authorities PKR 25,000 209 & 210

PKR 5,000
14 Offences not specified in Ordinance or 3 of Tax invoved  
(whichever is higher)

PKR 40,000
15 Failure to Collect & Deduct Tax or 10% of Tax Payable 160
(whichever is higher)

16 Failure to Display NTN PKR 5,000 181C

Failure to Furnish Information by Reporting PKR 2,000 each day of default

17 107, 108, 165B
Institution minimum PKR 25,000
Sr. offences Penalties Reference to Section of
Offence

18 Failure to Maintain Document 1% of Transaction value 108

Purchase of immovable property by

19 cash or bearer cheque where property 5% of value of property 68(4)
deternmined by Board
value exceeds 5 million rupees

PKR 100,000
20 Offshore Tax Evasion or 200% of Tax evaded  
(whichever is higher)
The Federal Government by notification or Board by an order
may exempt any person or class of persons from payment of the
penalty subject to conditions specified by such notification or
order.

[Section 182]
Offences & Prosecutions
Non-Compliance with Statutory Obligations
1. Any person who, without reasonable excuse, fails to

a) comply with a notice under sub-sec (3)2 & sub-sec (4)] of sec 114 or sub-sec (1)
of section 116;]
b) pay advance tax as required under sec 147;
c) comply with the obligation under Part V of Chapter3[or chapter XII] to collect or
deduct tax and pay the tax to the Commissioner;
d) comply with a notice served under section 140 or 176;
e) comply with the requirements of 5[sub-sec (3) or sub-sec (4) of] section 141; or
f) provide reasonable facilities and assistance as required under sub-sec (3) of
section 175,

shall commit an offence punishable on with a fine or imprisonment for a term not
exceeding one year, or both.
[Section 191] Cont’
Non-Compliance with Statutory Obligations

2.)
If a person convicted of an offence under clause (a) of
sub-sec (1) fails to furnish the return of income or
wealth statement to which the offence relates within
the period specified by the Court, the person shall
commit a further offence punishable on conviction
with a fine not exceeding PKR 50,000 or imprisonment
for a term not exceeding two years, or both
[Section 191]
Section Offence Prosecution

Fine upto PKR 100,000 or imprisonment for a term not exceeding 3

192 False Statement in Verification
years, or both

192A Concealment of Income Imprisonment upto 2 years or with fine or both.

192B Concealment of an Offshore Asset Imprisonment up to 3 years or with a fine up to PKR 500,000 or both

193 Failure to Maintain Records A fine not exceeding PKR 50,000 or imprisonment for a term not
exceeding two years, or both

194 Improper use of National Tax Fine not exceeding PKR 50,000 or imprisonment for a term not
Number exceeding 2 years, or both
Section Offence Prosecution

I. where the statement or omission was made knowingly or

Making False or Misleading recklessly, with a fine or imprisonment for a term not
195
Statements exceeding 2 years, or both; or
II. in any other case, with a fine.

imprisonment for a term not exceeding 7 years or with a fine up

195B Enabling offshore Tax Evasion
to 5 million Rupees or both

Obstructing an Income Tax

196 Authority fine or imprisonment for a term not exceeding 1 year, or both.

198 Unauthorized Disclosure of Fine of not less than PKR 500,000 or imprisonment for a term
Information by a Public Servant. not exceeding 1 year, or both.
 Offences By Companies And
Association Of Persons[sec-200]
1. Where an offence is committed by a company, every person who,
at the time the offence was committed, was:
a) The principal officer, a director, general manager, company
secretary or other similar officer of the company; or
b) Acting or purporting to act in that capacity.
2. Where an offence is committed by an association of persons,
every person who, at the time the offence was committed, was a
member of the association shall be guilty of the offence and all the
provisions of this Ordinance shall apply accordingly.
3. Sub-section(1) and (2) shall not apply to a person where;
c) The offence was committed without the person’s consent or
knowledge; and
d) The person has exercised all diligence to prevent the commission
of the offence.
 Prosecution Proceedings Without
Prejudice To Other Section[Sec-201]

A prosecution for an offence against this

Ordinance may be instituted without prejudice
to any other liability incurred by any person
under this Ordinance.
 Power To Compound Offences
[Section 202]

Where any person has committed any offence,

the Chief Commissioner may, with the prior
approval of the Board, either before to after the
institution of proceedings, compound such
offence subject to payment of tax due along
with default surcharge and penalty as is
determined under the provisions of this
Ordinance.
Trial By Special Judge [Section 203]
1. The Federal Government may, by notification in the official
Gazette, appoint as many Special Judges as it may consider
necessary, and where it appoints more than one Special Judge,
it shall specify in the notification the territorial limits within
which each of them shall exercise jurisdiction.
2. A Special Judge shall be a person who is or has been a Sessions
Judge and shall, on appointment, have the jurisdiction to try
exclusively an offence punishable under this ordinance other
than an offence referred to in section 198.
3. The provisions of the Court of the Criminal Procedure,1898
shall apply to the proceeding of the court of a special judges.
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4. A special judge shall take cognizance of, and have jurisdiction to try,
an offence triable under sub-section(1) only upon a complaint in writing
made by the Commissioner.
5. The Federal Government may, by order in writing, direct the transfer,
at any stage of the trial, of any case from the court of one special judge
to the court of another special judge for disposal, whenever it appears
to the Federal Government that such transfer shall promote the ends of
justice or tends to the general convenience of parties or witnesses.
6. In respect of a case transferred to a Special Judge, such judge shall
not, by reason of the said transfer, be bound to recall and record
against any witness again who has given evidence before the previous
Special Judge.
Appeal Against The Order Of A Special Judge
[Section 203A]

An appeal against the order of a Special Judge

shall lie to the respective High Court of a
Province within the thirty days of the passing of
the order and it shall be heard as an appeal
under the Code of Criminal Procedure 1898 by a
single Judge of the High Court.
Power To Tender Immunity From Prosecution
[Section 204]
1. The Federal Government may, for the purpose of obtaining the
evidence of any person appearing to have been directly or
indirectly concerned in, or privy to the concealment of income or
to the evasion of tax, tender to such person immunity from
prosecution for any offence under this ordinance or under the
Pakistan Penal Code or under any other Federal Law on condition
of the person making full and true disclosure of the whole
circumstances relating to the concealment of income or evasion of
tax.
2. A tender of immunity made to, and accepted by, the person
concerned shall render the person immune from prosecution for
any offence in respect of which the tender was made and to the
extent specified in the immunity.
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3. If it appears to the Federal Government that any
person to whom immunity has been tendered under
this section has not complied with the conditions on
which the tender was made or is concealing anything
or giving false evidence, the Federal Government may
withdraw the immunity, and any such person may be
tried for the offence in respect of which the tender of
immunity was made or for any other offence of which
the person appears to have been guilty in connection
with the same matter.
Case Related To Topic
 FBR unearths sales tax fraud by biscuit making
firm in Lahore
ISLAMABAD: The FBR's Directorate of Intelligence &
Investigation (IR), Lahore on receipt of credible information
related to sales tax fraud carried out action under Section 38
read with section 40 of the Sales Tax Act 1990 against a
biscuit company.
Assessment order was issued wherein an amount of Rs 4.27
billion as sales tax along with default surcharge and 100%
penalty for tax fraud was imposed upon the registered person.
Accordingly, the owner of the company was arrested. Due to
proper presentation of case by Directorate of Intelligence &
Investigation (IR) Lahore, two bail applications filed by the
accused were rejected by a special judge. Subsequently the
accused filed another application for bail before Lahore High
Court. The Lahore High Court, Rawalpindi Bench granted post
– arrest bail to the petitioner on deposit of an amount of Rs
300 million and submission of post-dated cheque worth Rs
100 million. The legal process is under way against the
accused.
Directorate General of Intelligence & Investigation-IR has
performed commendably well in the current financial year
from July 2020 to April 2021. The directorate general has
forwarded 1210 investigation reports involving revenue of Rs
197,714 million to the field formations.
The directorate general conducted 40 raids where estimated
revenue amounting to Rs 761 million is involved. Directorate
General filed 67 complaints under Anti-Money-Laundering
Act, 2010 against 75 accused persons involving Rs 55.385
million. It also seized 6667 cartons of illegal cigarattes.