ISLAMABAD (Kashmir English): The government has proposed heavy fines for businesses that fail to connect with the Federal Board of Revenue (FBR) digital tax system Under the Budget 2026-27.
The proposal is part of major reforms to strengthen tax compliance. It is aimed to expand digital integration and curb tax evasion through stricter enforcement and automated monitoring system.
According to the Finance Bill presented in the parliament on June 12, businesses that do not digitally connect with the FBR within the prescribed timeline will face a fine of up to Rs 1 million.
Repeated violations could result in penalties as high as Rs 5 million, according to officials.
In addition, authorities may seal businesses that continue to remain outside the digital tax system despite repeated warnings.
Crackdown proposed on fake invoices under new Budget
The budget proposals also include strict action against issuing fake or fictitious tax invoices.
Under the proposed framework, individuals or businesses involved in fake invoicing may be fined the full value of the invoice.
The Finance Bill suggests rolling out an automated enforcement system to detect and act against fake invoices more efficiently.
Any tax credit obtained through fraudulent invoices will be automatically cancelled under the new system, officials warned.
Additionally, discrepancies between input and output tax may attract a penalty of up to 20 percent.
The proposed provisions also include penalties for incorrect input tax claims, which will be subject to surcharges and additional fines.
Buyers dealing with suppliers issuing fake invoices may also face legal and financial consequences.
Furthermore, taxpayers failing to return wrongly claimed tax credits within 60 days may be charged an additional 20 percent penalty.
