ISLAMABAD: The Federal Board of Revenue (FBR) has updated its IRIS portal to enforce the newly introduced Rs. 25,000 Active Taxpayers List (ATL) surcharge for individuals, preventing late filers of Tax Year 2025 from appearing on the ATL unless they first pay the penalty.
The move came into effect on July 1, 2026, surprising taxpayers, tax practitioners, and experts alike, as many expected the new surcharge regime introduced through the Finance Act, 2026 to apply only after the filing of Tax Year 2026 income tax returns.
Instead, the FBR has immediately implemented the new requirement despite the fact that Tax Year 2026 income tax return forms are still not available on the IRIS system.
IRIS Now Demands Rs. 25,000 Before ATL Inclusion
Individuals filing their Tax Year 2025 returns after the due date are now being required by the IRIS system to pay a Rs. 25,000 surcharge before they can be included in the Active Taxpayers List.
Previously, late-filing individuals were subject to a much smaller surcharge. However, the Finance Act, 2026 increased the ATL surcharge for individuals from Rs. 1,000 to Rs. 25,000, while AOP now face surcharges of up to Rs. 50,000 and Companies at Rs. 100,000.
Temporary Situation Until Tax Year 2026 Returns Open
The current requirement is expected to be short-lived.
Under the new law, the FBR is expected to shift the ATL status mechanism to Tax Year 2026 returns once the new return forms are released on IRIS. After that, taxpayers who file their Tax Year 2026 returns are expected to have their ATL status updated within 24 hours of filing, subject to the prescribed conditions.
However, since the Tax Year 2026 return forms have not yet been launched, taxpayers currently have no option other than filing their pending 2025 returns under the updated IRIS system.
Experts Question Timing of Implementation
Tax experts have criticized the FBR’s decision to implement the higher surcharge before making the new tax return forms available.
According to practitioners, taxpayers were given no prior guidance, implementation roadmap, or transition period. Introducing the penalty from July 1 while the relevant returns cannot yet be filed has created unnecessary confusion and uncertainty.
Many believe the FBR should have first enabled Tax Year 2026 filing before enforcing the new ATL provisions, allowing taxpayers to comply with the new law in the manner intended by Parliament.
Alternative to Paying the Rs. 25,000 Surcharge
The Finance Act, 2026 has also introduced a significant relief option for individuals who do not wish to pay the Rs. 25,000 surcharge.
Under the amended Section 182A of the Income Tax Ordinance, 2001, an individual may become eligible for inclusion in the Active Taxpayers List without paying the surcharge by furnishing an undertaking to the Commissioner.
The undertaking must declare that the individual will not purchase, acquire, or obtain ownership or beneficial interest in any immovable property for a period of six months from the date of furnishing the undertaking.
This option is expected to benefit taxpayers who have no plans to acquire property in the near future but still need ATL status to enjoy reduced withholding tax rates on banking transactions, vehicle registration, property transfers, and other taxable activities.
Confusion Continues
Until the Tax Year 2026 return forms are made available, taxpayers remain caught between the old filing year and the new surcharge regime.
With the IRIS portal already enforcing the Rs. 25,000 surcharge on late Tax Year 2025 returns, many taxpayers are questioning why the FBR has implemented the financial penalty immediately while delaying the very tax return forms required under the new system.
Tax professionals are urging the FBR to issue an official clarification and implementation timeline to remove uncertainty and ensure taxpayers are not unfairly burdened during the transition to the new tax year.
