Learn about FBR’s proposed draft rule on late tax return filing, the Rs. 25,000 penalty, and how filing a 6-month property undertaking can help avoid the fine.
The Federal Board of Revenue (FBR) has introduced a new draft document addressing late income tax return submissions and the heavy financial penalties associated with them. Historically, filing after the due date resulted in a taxpayer being placed on a late filer list, subject to higher tax rates on transactions. Under the proposed rule, the FBR plans to replace late filer and non-filer categories with a direct penalty of Rs. 25,000 for late submissions. However, the proposal offers a specific mechanism that allows taxpayers—including salaried individuals—to completely avoid this penalty.
This article outlines how the FBR draft rule works, how taxpayers can remain compliant, and the step-by-step procedure to avoid paying the Rs. 25,000 fine.
FBR’s Draft SRO Process and Due Date Extensions
When the FBR issues a Statutory Regulatory Order (SRO) or similar document, it is initially released as a draft for 7 days. This period allows stakeholders to submit feedback and suggestions before final amendments are officially implemented.
Regarding tax return filing deadlines:
- The original due date of September 30 was extended to October 15.
- There are possibilities of a further 15-day extension.
- If no further extension is granted and a taxpayer files on October 16, they become liable to pay a penalty of Rs. 25,000.
Understanding the New Rs. 25,000 Late Filing Penalty
In previous tax years (up to June 30, 2026), missing the deadline resulted in a taxpayer being classified as a “late filer.” When purchasing property, late filers faced higher tax rates than timely filers, while non-filers faced entirely different rates.
To remove the confusion surrounding late-filer and non-filer classifications, the FBR has proposed replacing these categories with a fixed Rs. 25,000 penalty for filing after the deadline. This penalty applies significantly to individual taxpayers, particularly salaried individuals who have already paid their taxes through deductions.
How to Avoid the Rs. 25,000 Fine: The Property Undertaking Condition
The draft document outlines one primary condition to avoid the Rs. 25,000 late filing penalty: taxpayers must submit an undertaking agreeing not to purchase any property for the next 6 months.
Requirements for the Undertaking
The undertaking functions similarly to an official stamp paper declaration and must include:
- Taxpayer’s Name
- National Identity Card (CNIC) number or National Tax Number (NTN)
- Relevant Tax Year
- Date of tax return filing
- A declaration confirming no property purchases will be made during the upcoming 6-month period
Example Scenario
If a taxpayer files their tax return for the previous tax year 2026 late—for instance, on November 1—they can submit the undertaking declaring they will not purchase any property for the next 6 months. By providing this written commitment, the Rs. 25,000 penalty is waived.
Application Process on Iris
To facilitate this exception, the FBR will introduce an application process directly within the Iris portal for returns submitted after the due date:
- Log into the Iris system after the filing deadline has passed.
- Submit the online application along with the property undertaking.
- System generates a specific document number.
- Mention the generated document number in the required field on the portal.
Once completed, the taxpayer’s name will be included in the active filer list without paying the Rs. 25,000 fine. Additionally, the previous charge of Rs. 1,000 is no longer required. Further procedural updates will be released once the Iris portal feature goes live.
Frequently Asked Questions
Q1: What happens if I file my income tax return after the deadline?
If you file after the due date and no extension applies, you face a proposed penalty of Rs. 25,000 under the new FBR draft document.
Q2: How can I avoid paying the Rs. 25,000 late filing penalty?
You can avoid the penalty by submitting a formal undertaking stating that you will not purchase any property for the next 6 months.
Q3: What details must be included in the property undertaking?
The undertaking must include your full name, CNIC or NTN, the relevant tax year, the filing date, and the declaration regarding property purchase.
Q4: How were late filers penalized prior to this new draft proposal?
Up until June 30, 2026, filing late resulted in being listed as a late filer, which incurred higher tax rates than active filers during property purchases.
Q5: Will I still have to pay the previous Rs. 1,000 fee when submitting the undertaking?
No, according to the draft document, submitting the required undertaking allows your name to be included in the filer list without paying the Rs. 25,000 penalty or the previous Rs. 1,000 fee.
Conclusion
The FBR’s draft document aims to streamline late filing penalties by replacing complex late-filer categories with a straightforward Rs. 25,000 fine. However, taxpayers who do not intend to acquire real estate in the immediate future can completely avoid this fine by providing a 6-month property purchase undertaking via the Iris portal. Following this process enables taxpayers to secure active filer status without incurring financial penalties.
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