The Federal Board of Revenue (FBR) has taken decisive action against individuals who have neglected to declare their business bank accounts, marking a significant move to bolster tax compliance in the country.
As per FBR sources, the declaration of business bank accounts is obligatory for individuals engaged in business transactions. To enforce this crucial requirement, the FBR has invoked relevant provisions of tax laws and initiated penalties for those who have not adhered to the declaration mandate.
Under the FBR’s directive, individuals who have intentionally failed to declare their business bank accounts in their registration applications or have neglected to update their registration profiles to declare existing business bank accounts are liable to face penalties.
According to the directive, such individuals will be required to pay a penalty of Rs. 10,000 for each day of default, calculated from either the date of submission of their registration application or the date of opening the undisclosed business bank account, whichever is later. However, if the penalty amount for each undisclosed bank account falls below Rs. 100,000, individuals must still pay a fixed penalty of Rs. 100,000 for each undisclosed business bank account.
It’s worth noting that this provision has been in effect since October 1, 2021. During this period, taxpayers have had the opportunity to update their registration forms to declare their business bank accounts.
The definition of a business bank account is provided under Section 114A of the Income Tax Ordinance, 2001, which mandates that every taxpayer declare to the Commissioner the bank account used for business transactions. Such declarations can be made through the original or modified registration form, as prescribed under Section 181 of the Ordinance.
This move by the FBR underscores the government’s unwavering commitment to transparency and compliance in financial matters and taxation. It serves as a vital reminder to individuals engaged in business activities to fulfill their legal obligations promptly and accurately by declaring their business bank accounts. Failure to comply may result in penalties and legal consequences.