Lahore 22°C
Default surcharge
(1) A person who fails to pay –
(a) any tax, excluding the advance tax under section 147 and default surcharge under this section;
(b) any penalty; or (c) any amount referred to in section 140 or 141, on or before the due date for payment shall be liable for default surcharge at a rate equal to twelve percent or KIBOR plus three percent per annum, whichever is higher on the tax, penalty or other amount unpaid computed for the period commencing on the date on which the tax, penalty or other amount was due and ending on the date on which it was paid :
Provided that if the person opts to pay the tax due on the basis of an order under section 129 on or before the due date given in the notice under sub- section (2) of section 137 issued in consequence of the said order, and does not file an appeal under section 131, he shall not be liable to pay default surcharge for the period beginning from the due date of payment in consequence of an order appealed against to the date of payment in consequence of notice under sub-section (2) of section 137.
(1A) A person who fails to pay advance tax under section 147 shall be liable for default surcharge at a rate equal to 12 per cent per annumon the amount of tax unpaid computed for the period commencing on the date on which it was due and ending on the date on which it was paid or date on which the return of income for the relevant tax year was due, whichever is earlier.
(1B) Where, in respect of any tax year, any taxpayer fails to pay tax under sub-section (4A), or (6) of section 147 or the tax so paid is less than ninety per cent of the tax chargeable for the relevant tax year, he shall be liable to pay default surcharge at the rate of 12 per cent per annum on the amount of tax so chargeable or the amount by which the tax paid by him falls short of the ninety per cent, as the case may be; and such default surcharge shall be calculated from the first day of April in that year to the date on which assessment is made or the thirtieth day of June of the financial year next following, whichever is the earlier :
Provided that in the case of person having a special tax year, the default surcharge shall be calculated on and from the first day of the fourth quarter of the special tax year till the date on which assessment is made or the last day of special tax year, whichever is earlier.
(2) Any default surcharge paid by a person under sub-section (1) shall be refunded to the extent that the tax, penalty or other amount to which it relates is held not to be payable.
(3) A person who fails to collect tax, as required under Division II of Part V of this Chapter or Chapter XII or deduct tax as required under Division III of Part V of this Chapter or Chapter XII or fails to pay an amount of tax collected or deducted as required under section 160 on or before the due date for payment shall be liable for default surcharge at a rate equal to 12 per cent per annum on the amount unpaid computed for the period commencing on the date the amount was required to be collected or deducted and ending on the date on which it was paid to the Commissioner :
Provided that if the person opts to pay the tax due on the basis of an order under section 129 on or before the due date given in the notice under sub-section (2) of section 137 issued in consequence of the said order and does not file an appeal under section 131, he shall not be liable to pay default surcharge for the period beginning from the date of order under section 161 to the date of payment.
(5) The Commissioner shall make an assessment of any default surcharge imposed under this Part in accordance with the provisions of Part II of this Chapter as if the default surcharge were tax.
(6) The provisions of Parts III and IV apply to an assessment of default surcharge as if it were an assessment of tax.
(7) Where a person is liable for default surcharge under this Part, the Commissioner may, at his discretion, make assessment of default surcharge for the period of default or part thereof, notwithstanding that the tax due has not actually been paid.
(a) any tax, excluding the advance tax under section 147 and default surcharge under this section;
(b) any penalty; or (c) any amount referred to in section 140 or 141, on or before the due date for payment shall be liable for default surcharge at a rate equal to twelve percent or KIBOR plus three percent per annum, whichever is higher on the tax, penalty or other amount unpaid computed for the period commencing on the date on which the tax, penalty or other amount was due and ending on the date on which it was paid :
Provided that if the person opts to pay the tax due on the basis of an order under section 129 on or before the due date given in the notice under sub- section (2) of section 137 issued in consequence of the said order, and does not file an appeal under section 131, he shall not be liable to pay default surcharge for the period beginning from the due date of payment in consequence of an order appealed against to the date of payment in consequence of notice under sub-section (2) of section 137.
(1A) A person who fails to pay advance tax under section 147 shall be liable for default surcharge at a rate equal to 12 per cent per annumon the amount of tax unpaid computed for the period commencing on the date on which it was due and ending on the date on which it was paid or date on which the return of income for the relevant tax year was due, whichever is earlier.
(1B) Where, in respect of any tax year, any taxpayer fails to pay tax under sub-section (4A), or (6) of section 147 or the tax so paid is less than ninety per cent of the tax chargeable for the relevant tax year, he shall be liable to pay default surcharge at the rate of 12 per cent per annum on the amount of tax so chargeable or the amount by which the tax paid by him falls short of the ninety per cent, as the case may be; and such default surcharge shall be calculated from the first day of April in that year to the date on which assessment is made or the thirtieth day of June of the financial year next following, whichever is the earlier :
Provided that in the case of person having a special tax year, the default surcharge shall be calculated on and from the first day of the fourth quarter of the special tax year till the date on which assessment is made or the last day of special tax year, whichever is earlier.
(2) Any default surcharge paid by a person under sub-section (1) shall be refunded to the extent that the tax, penalty or other amount to which it relates is held not to be payable.
(3) A person who fails to collect tax, as required under Division II of Part V of this Chapter or Chapter XII or deduct tax as required under Division III of Part V of this Chapter or Chapter XII or fails to pay an amount of tax collected or deducted as required under section 160 on or before the due date for payment shall be liable for default surcharge at a rate equal to 12 per cent per annum on the amount unpaid computed for the period commencing on the date the amount was required to be collected or deducted and ending on the date on which it was paid to the Commissioner :
Provided that if the person opts to pay the tax due on the basis of an order under section 129 on or before the due date given in the notice under sub-section (2) of section 137 issued in consequence of the said order and does not file an appeal under section 131, he shall not be liable to pay default surcharge for the period beginning from the date of order under section 161 to the date of payment.
(5) The Commissioner shall make an assessment of any default surcharge imposed under this Part in accordance with the provisions of Part II of this Chapter as if the default surcharge were tax.
(6) The provisions of Parts III and IV apply to an assessment of default surcharge as if it were an assessment of tax.
(7) Where a person is liable for default surcharge under this Part, the Commissioner may, at his discretion, make assessment of default surcharge for the period of default or part thereof, notwithstanding that the tax due has not actually been paid.
Amendment history (23)
- The words “Federal Government” substituted by the Finance Act, 2021.
- The words “ADDITIONAL TAX” substituted by the Finance Act, 2010. The substituted provision has
- The words “Additional tax” substituted by the Finance Act, 2010. The substituted provision has been
- Substituted by the Finance Act, 2003. The substituted clause (a)
- The words “additional tax” substituted by the Finance Act, 2010. The substituted provision has been
- The words “KIBOR plus three per cent per quarter” substituted by the Finance Act, 2012.
- The figure “18” substituted by Finance Act, 2015.
- The expression “12 per cent per annum” substituted by Finance Act, 2024.
- Added by the Finance Act, 2012.
- Inserted by the Finance Act, 2003.
- The figure “18” substituted by Finance Act, 2015
- Inserted by the Finance Act, 2004.
- Inserted by the Finance Act, 2006.
- The word “eighty” substituted by the Finance Act, 2006.
- Full stop substituted by the Finance Act, 2017
- Added by the Finance Act, 2017
- Full stop substituted by the Finance Act, 2012.
- Sub-section (4) omitted by the Finance Act, 2003. The omitted sub-section (4)
- New sub-section (7) added through Finance Act, 2020 dated 30 June, 2020.
- Added by the Finance Act, 2003.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Sub-section (2) substituted by the Finance Act, 2006. The substituted sub-section (2)
- Inserted by the Finance Act, 2002.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Source FBR PDF page 425
Unofficial reference, compiled from the FBR’s consolidated Income Tax Ordinance 2001 (amended up to 30 June 2026). Provided for general information only — not an official FBR publication and not legal or tax advice. Always verify against the official FBR text before relying on it for filing or any decision.