The federal government has proposed a significant increase in the fee that taxpayers must pay to restore their status on the Active Taxpayer List (ATL) if they file their income tax returns after the due date. The proposal has been included in the Finance Bill 2026-27 and is aimed at encouraging taxpayers to submit their returns on time.
Under the current rules, an individual who misses the tax return filing deadline can regain ATL status by paying a surcharge of Rs. 1,000. However, the government now wants to increase this amount to Rs. 25,000, representing a 25-fold jump in the fee. If approved by Parliament, the revised charges will take effect from July 1, 2026.
The proposed amendment has been made through changes to Section 182A of the Income Tax Ordinance, 2001, which governs the Active Taxpayer List maintained by the Federal Board of Revenue (FBR). Taxpayers who fail to file their returns within the prescribed deadline are removed from the ATL and must pay the applicable surcharge to regain their active status.
Proposed Change for Individuals
| Category | Current ATL Restoration Fee | Proposed ATL Restoration Fee |
|---|---|---|
| Individuals | Rs. 1,000 | Rs. 25,000 |
The government believes that a higher surcharge will encourage timely compliance and reduce the number of taxpayers who wait until after the deadline to submit their returns. Filing on time is important because ATL status provides access to lower withholding tax rates on various transactions, including banking, property, vehicle registration, and other financial activities.
Wider Crackdown on Late Filers
The proposal is part of a broader effort to strengthen tax compliance. Alongside the increase for individual taxpayers, the government has also proposed much higher ATL restoration charges for other categories of taxpayers, including Associations of Persons (AOPs) and companies. According to related proposals in the Finance Bill, AOPs could face a surcharge of Rs. 50,000, while companies may have to pay Rs. 100,000 to restore their ATL status after missing the filing deadline.
New ATL Surcharge Late Tax Filers
| Taxpayer Category | Current Fee | Proposed Fee |
|---|---|---|
| Individual | Rs. 1,000 | Rs. 25,000 |
| Association of Persons (AOP) | Rs. 10,000 | Rs. 50,000 |
| Company | Lower existing rate | Rs. 100,000 |
What This Means for Taxpayers
If the proposal becomes law, taxpayers who fail to file their income tax returns before the due date will face substantially higher costs to regain active taxpayer status. This means that delaying a return could become significantly more expensive than in previous years.
For individuals, the jump from Rs. 1,000 to Rs. 25,000 is particularly noteworthy and signals the government’s intention to discourage late filing and improve overall tax compliance. Taxpayers who wish to continue enjoying the benefits associated with ATL status may need to ensure that their returns are filed before the deadline to avoid these additional costs.
Learn more: Revised Property Tax Rates 2026-27
Key Takeaway
The Finance Bill 2026-27 proposes one of the largest increases in ATL restoration charges in recent years. If approved, individuals who file their tax returns after the deadline will need to pay Rs. 25,000 instead of Rs. 1,000 to return to the Active Taxpayer List, while AOPs and companies will also face significantly higher restoration fees. The proposed changes are expected to take effect from July 1, 2026.
