Receiving a notice from the Federal Board of Revenue (FBR) to file a return of income for a complete year can be a stressful experience, especially for shopkeepers, traders, and ordinary taxpayers unsure of what it means. If you have received a notice under Section 114 of the Income Tax Ordinance 2001, understanding your legal obligations is crucial.

When a taxpayer fails to file their return on time, the Commissioner has the authority to directly order the submission of that return. This article explains what a Section 114 notice entails, who is legally obligated to file an income tax return, how to reply to the notice via the IRIS portal, and the severe penalties you may face if you choose to ignore it.

What is an FBR Notice Under Section 114?

According to Section 114 of the Income Tax Ordinance 2001, if the Commissioner is of the opinion that it was mandatory for you to file an income tax return and you failed to do so, they can issue a written notice. Typically, this notice grants you a 30-day period to submit your tax return.

One of the most important provisions to understand is Section 114(5). Under this section, the Commissioner holds the authority to demand income tax returns for the last five completed tax years. Even if you only registered in 2024 or 2025, the FBR can still legally require you to file returns for the past five years.

For context, a standard tax year generally begins in July and ends on June 30. When you log into your IRIS portal, you will find this notice located in your Inbox under the “Declaration” tab. Responding to these notices within the stipulated 30 days is a strict legal requirement.

Who is Required to File a Tax Return Under Section 114(1)?

Many individuals and entities mistakenly believe they are exempt from filing taxes. Under Section 114(1), filing an income tax return is mandatory for:

• Every registered company and NGO.
• Any individual whose income exceeds the taxable limit.
• Individuals with a business income between Rs. 300,000 and Rs. 400,000.
• Businesses with a commercial electricity bill exceeding Rs. 500,000.
• Owners of a vehicle larger than 1000 CC.
• Owners of a 500 square-yard plot or a 2000 square-foot flat located within a municipal area.
• Anyone who has obtained a National Tax Number (NTN).

If you fall into any of these categories, particularly if you simply hold an NTN, filing your tax return is legally mandatory.

How to Reply to the Notice on the IRIS Portal

Replying to the notice through the FBR’s IRIS portal is a straightforward process if you follow the right steps:

1. Log in to the IRIS portal using your CNIC and password.
2. Navigate to your Inbox and locate the 114(4) notice.
3. Click on the Reply icon next to the notice.
4. Select the relevant tax form based on your income source (e.g., Business Income or Salary).
5. Note: If you accidentally open the wrong form, delete it and return to the inbox to select the correct one.
6. Save your data and submit the return. Once submitted, the notice will move from your Inbox to the “Completed Tasks” section.

It is highly recommended to file your return immediately after generating an NTN; otherwise, the FBR will continue to issue these notices.

Consequences of Ignoring the FBR Notice

Ignoring a Section 114 notice is a risky strategy that can lead to severe legal and financial repercussions. If you fail to reply, the following actions can be taken against you:

• Ex-Parte Assessment (Section 121): The Commissioner will conduct an ex-parte assessment, meaning they will calculate and determine your tax liability on their own without your input.
• Heavy Penalties (Section 182): You will be subject to substantial financial penalties for non-compliance.
• Prosecution (Section 191): The FBR can initiate formal legal proceedings against you.

To avoid these penalties, never ignore FBR notices. Ensure that your income tax returns are filed on time through the portal.

Frequently Asked Questions

Q: How much time do I have to reply to a Section 114 notice? A: The FBR generally provides a 30-day timeframe to submit your income tax return after issuing a Section 114 notice.

Q: Can the FBR demand tax returns for years before I was registered? A: Yes. Under Section 114(5), the Commissioner can demand returns for the last five completed tax years, regardless of whether you registered in 2024 or 2025.

Q: Do I have to file a return if I only made an NTN but have no taxable income? A: Yes. Simply obtaining an NTN makes it legally mandatory for you to file an income tax return. If you do not file, you will continue to receive notices.

Q: What happens if I ignore the notice entirely? A: Ignoring the notice can result in an ex-parte assessment under Section 121 (where the Commissioner calculates your tax liability for you), heavy penalties under Section 182, and potential legal prosecution under Section 191.

Q: Where can I find the FBR notice on the IRIS portal? A: You can find the notice by logging into your IRIS portal, going to your Inbox, and checking under the “Declaration” tab.

Conclusion

An FBR notice under Section 114 is a strict legal requirement that must not be ignored. Whether you own a 1000 CC vehicle, hold property in a municipal area, or simply possess an NTN, you are legally bound to file your tax return. Failing to do so can result in ex-parte assessments, heavy fines, and legal prosecution. The safest and most effective strategy is to log into your IRIS portal and reply to inbox notices promptly within the 30-day deadline.

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Author & Professional Services Information Ch. Muhammad Saeed, Advocate High Court Senior Member High Court Bar Association Lahore

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