Reduction in penalty for late filers of withholding Tax Statements

[Section 182 read with section 115, 165, 165A &165B]

Penalty for late filers of withholding tax statements: Prior to the Finance Act, 2018 a withholding agent failing to furnish a statement as required under section 115,165,165A or 165B of the Income Tax Ordinance, 2001 within the due date was liable to pay penalty of Rs. 2,500/- for each day of default subject to a minimum penalty of Rs.10,000/- under section 182 of the Income Tax Ordinance, 2001.

In order to alleviate the hardship of withholding agents who make payment of the tax collected/withheld into the treasury within the due date but are unable to file the statements as required under sections 115,165,165A or 165B.

If the withholding agents fail to file withholding tax statements within the due date(s) on account of any reason, such persons, consequent to the passage of the Finance Act, 2018 shall be obliged to pay a total penalty of Rs.5000/- under section 182 of the Income Tax Ordinance, 2001 as against minimum penalty of Rs.10,000/- or penalty of Rs.2,500/- daily as was the case prior to the passage of the Finance Act, 2018.

However, such reduced penalty shall only be applicable in cases which fulfill the twin conditions of the tax collected /withheld having been deposited into the exchequer within the due date as mentioned earlier and where the statement(s) under sections 115,165,165A or 165B are filed by the withholding agent within 90 days from the due date for filing such statements.

In case these two conditions are not fulfilled, the taxpayer shall be liable to pay a minimum penalty of Rs.10,000/- or penalty of Rs. 2,500/- daily as was the case prior to the Finance Act, 2018.