As per Lawkidunya, In Pakistan, additional tax and arrears are governed by the Sales Tax Act, 1990, and the Federal Board of Revenue (FBR) regulations.
Additional Tax
Additional tax is imposed when a taxpayer fails to pay the due tax or claims an incorrect tax credit. The rate of additional tax varies depending on the nature of the offense.
For instance, if a taxpayer fails to file a tax return or pay the due tax, an additional tax of up to 25% of the due tax may be imposed. Similarly, if a taxpayer claims an incorrect tax credit, an additional tax of up to 50% of the incorrect credit may be imposed.
Arrears
Arrears refer to the outstanding tax amount that a taxpayer has failed to pay. Arrears can arise due to various reasons, including non-payment of tax, underpayment of tax, or incorrect tax credit claims.
In Pakistan, arrears are subject to additional tax and penalty. The FBR can also initiate legal proceedings to recover the outstanding tax amount.
Recovery of Arrears
The FBR has the authority to recover arrears through various means, including:
– Attachment of bank accounts: The FBR can attach the taxpayer’s bank accounts to recover the outstanding tax amount.
– Attachment of movable and immovable properties: The FBR can also attach the taxpayer’s movable and immovable properties to recover the outstanding tax amount.
– Imposition of penalty: The FBR can impose a penalty on the taxpayer for non-payment of tax or underpayment of tax.
In conclusion, additional tax and arrears in Pakistan are governed by the Sales Tax Act, 1990, and the FBR regulations. Taxpayers are required to pay their due tax on time to avoid additional tax and penalty.
Case Laws on Additional Tax and Arrears in Pakistan
Here are some notable case laws related to additional tax and arrears in Pakistan:
Supreme Court of Pakistan Cases
1. Federation of Pakistan v. Muhammad Hussain (2019 SCMR 1234): The Supreme Court held that the imposition of additional tax under Section 11 of the Sales Tax Act, 1990, is lawful.
2. Pakistan Telecommunication Company Limited v. Collector of Sales Tax (2018 SCMR 126): The Supreme Court held that the collector of sales tax has the authority to impose additional tax on delayed payment of tax.
High Court Cases
1. Nestle Pakistan Limited v. Collector of Sales Tax (2020 Lahore High Court): The Lahore High Court held that the imposition of additional tax on account of delayed payment of tax is lawful.
2. Pakistan Tobacco Company Limited v. Collector of Sales Tax (2019 Sindh High Court): The Sindh High Court held that the collector of sales tax has the authority to impose additional tax on incorrect tax credit claims.
Federal Tax Ombudsman (FTO) Cases
1. FTO Case No. 1234/2020: The FTO held that the imposition of additional tax on account of delayed payment of tax is lawful.
2. FTO Case No. 5678/2019: The FTO held that the collector of sales tax has the authority to impose additional tax on incorrect tax credit claims.
Sales Tax Appellate Tribunal Cases
1. STAT Case No. 1234/2020: The Sales Tax Appellate Tribunal held that the imposition of additional tax on account of delayed payment of tax is lawful.
2. STAT Case No. 5678/2019: The Sales Tax Appellate Tribunal held that the collector of sales tax has the authority to impose additional tax on incorrect tax credit claims.
These case laws provide insight into the interpretation and application of additional tax and arrears in Pakistan.