Pakistan no longer has a "late filer" category. Through the Finance Act 2026, Rule 1A of the Tenth Schedule of the Income Tax Ordinance 2001 has been omitted, deleting the middle status that sat between filer and non-filer. From Tax Year 2027 onwards there are only two positions: your name is on the Active Taxpayer List (ATL), or it is not, and your withholding tax rates follow that single fact. If you file late, you no longer pay the in-between late filer rates; you pay full non-filer rates until your name is restored to the ATL.
What the late filer category was
The category was created by the Finance Act 2024. It covered a specific person: someone whose name was on the ATL but who had filed their return after the due date. Instead of treating that person as a full filer or a full non-filer, the law charged them withholding rates higher than a timely filer's but lower than a non-filer's, most importantly on property transactions under Sections 236C (sale) and 236K (purchase). The Finance Act 2025 then raised those late filer property rates further, which made the middle tier noticeably expensive in its own right.
What exactly changed
The KPMG Taseer Hadi brief on the Finance Act 2026 states it plainly: the higher rates for late filers have been abolished by omitting Rule 1A of the Tenth Schedule, so the rates applicable to late filers are now the same as those for persons who filed within the due date or extended due date. The Crowe Finance Act 2026 handbook describes the same change as the withholding regime reverting to a two-tier structure of filers and non-filers.
Read that carefully, because it cuts both ways:
- If you filed late but your name is on the ATL (because you filed and paid what was needed for restoration), you now get full filer rates. The old late filer penalty rates on property are gone. For Tax Year 2026-27, the filer rates on property are a flat 1.25% on purchase under Section 236K and 2.75% on sale under Section 236C.
- If you filed late and your name is not on the ATL, there is no middle tier left to catch you. You are charged at non-filer rates, which on property and banking transactions are far higher, until you restore your status.
The catch: the gate moved, it did not disappear
Abolishing the late filer category is relief for people who complete the restoration process. It is not a general amnesty for late filing, because the price of getting back on the ATL went up in the very same Finance Act. The Section 182A surcharge for restoring ATL status after a late filing rose from Rs 1,000 to Rs 25,000 for an individual (Rs 50,000 for an AOP, Rs 100,000 for a company). So the system is now simpler and harsher at the same time: one fixed, larger payment at the gate, then full filer treatment, instead of a season of elevated rates.
In practice, whether a late filing costs you a little or a lot now depends on a single question: how quickly do you get your name back on the ATL? Our ATL surcharge and restoration guide covers the steps, including the six-month property undertaking that lets an individual skip the surcharge, and our missed deadline guide covers the separate Section 182 penalty that still applies to the late return itself.
Who should do what now
- Filed late and already back on the ATL: nothing further. You are a filer for rate purposes, including property transactions.
- Filed late but not yet on the ATL: complete the restoration now. Every property, vehicle or banking transaction before restoration is charged at non-filer rates, with no late filer discount left.
- Have not filed at all: you are a non-filer in the full sense. File the return, then restore status; our how to become a filer guide covers the route from the start.
- Planning a property transaction: check your ATL status before the transaction date, not after. Rates are applied on your status at the time of the transaction, and a status fixed a week later does not reprice a deal already done.
Frequently asked questions
I filed my Tax Year 2025 return late and paid late filer property rates last year. Does this change refund that?
No. The abolition applies from the Finance Act 2026; rates correctly charged under the law as it stood then are not reopened by the change.
Does the end of the late filer category mean late filing is now free of consequences?
No. The Section 182 penalty for the late return still exists, the Rs 25,000 restoration surcharge still applies, and until your name is restored you are charged at full non-filer withholding rates.
Last updated: 18 October 2026
Sources: KPMG Taseer Hadi, A Brief of Finance Act 2026; Crowe, Finance Act Tax Handbook 2026; Dawn, FBR extends deadline for filing income tax returns; Federal Board of Revenue