Pakistan Tax Bar Association (PTBA) has demanded the tax authorities of providing clear 90 days for return filing from the date when the portal is error free.

In a letter sent to Asim Ahmad, chairman, Federal Board of Revenue (FBR) on Friday, the PTBA requested that the taxpayers be provided the statutory period of clear 90 days for submission of their income tax returns from the day, the return is complete and portal is error free.

Moreover, timely decision would not only be appreciated by the taxpayers/legal fraternity, who are working very hard day & night by playing their part towards the legal responsibility for contributing towards national exchequer but also in collection of taxes at the appropriate time.

PTBA has already pointed out various technical and practical issues in the IRIS pre-defined formulas in the Income Tax Returns for Tax Year 2022 and we also endorse the stand / opinion / observations about system highlighted by our regional affiliated bars. However, as for as filing of Income Tax Return is concerned, tax machinery has not reached upto the mark to facilitate the taxpayers by providing error free, flawless and hassle free tax return forms.

READ MORE: KTBA demands perfect tax return form before setting filing deadline

Presently, it appears that the FBR has shifted/moved all its legal obligations/duties towards the taxpayers and FBR has only become the office for reporting, holding the taxpayer’s refund, creating  illegal demands, using harsh recovery measures, charging heavy penalties, thrashing out the superior court decisions, illegal assessment on settled issues and squeezing the existing taxpayers; instead creating/providing opportunities for ease of doing business, of facilitating the taxpayer, making a balanced tax policy, harmonizing tax laws, reducing the tax litigation, broadening the tax base, promoting the tax culture and reducing the cost of doing business.

That, the aforementioned situation is a big question mark on the transparency and integrity of the FBR and also increasing the gap of trust deficit and lack of confidence between taxpayer and tax authorities.

The PTBA pointed out to the provision of section 114 of the Income Tax Ordinance, 2001 whereby every person is obliged to file tax return for a tax year on the form and manner as would be prescribed by the FBR for the relevant Tax Year i.e 30th day of September of each year as provided under section 118 of the Income Tax Ordinance, 2001.

READ MORE: FBR extends return filing date up to October 31, 2022

Non submission of the returns by the tax payers within due dates, not only entail the penalties but exclusion of name from the Active Tax Payer List (ATL).

The obligations placed by law on the relevant officials of FBR through Rule 34A of the Income Tax Rules, 2002 as notified vide SRO.1185(I)2020 dated 06-11-2020 whereby certain timelines in notifying the income tax return forms have been laid down.

As per sub-rule (2) to (4) of Rule 34A the draft of income tax return has to be notified for suggestions from all persons likely to be effected thereby on or before the first day of December of the financial year following the financial year to which the return relates by observing following timelines and procedure prescribed therein.

Vide clause (e) of sub-rule (4) of Rule 34A it is clearly provided that final income tax return shall be made available on portal IRIS by thirty first day of January of the financial year following the financial year to which the return relates. Your good self would kindly note that from thirty first day of January till thirtieth of June is the period wherein all the deficiencies or corrections in the system can be taken care of and from 1st day of July every tax payer would have a clear 90 days’ time to submit his/it return.

As against the legal requirement as prescribed by law the draft of income tax return for the T Y 2022 had notified on 21-06-2022 and final return was notified and made available on portal IRIS on 30-06-2022 which is still deficient, whereas it was required to be made available on thirty first day of January.

In addition to the above, we also take the opportunity to further draw your kind attention to the following issues in the return which needs your immediate action:

READ MORE: FBR allows refund adjustment to facilitate return filing

ISSUES OF RETURN

That, as per law the tax payer is entitled to claim adjustment of his previous refunds against tax liability for the current tax year but the relevant column for adjustment of refund has illegally been blocked, which is against the fundamental rights and present scheme of law under the Income Tax Ordinance, 2001. In this regard an earlier letter was submitted to this good office dated 23-08-2022.

That, we have already sent letter dated 27-09-2022 for issuance of clarification on the value of immovable property declared by the taxpayer (actual consideration paid, value fixed by D.C. or value fixed by FBR) is still pending and needs consideration, enabling the taxpayer to declare the value of immovable property.

Similarly, the draft of manual return of income for the Individuals and AOPs for the Tax Year 2022 was issued as late as on 26-08-2022 whereas the final SRO.1733(I)/2022 has been issued on 13-09-2022. Meaning thereby only 47-days’ time has been allowed to file the manual returns which is insufficient as provided under law supra.

Similarly, the draft SRO.1829(I)/2022 for Tax Chargeable/Payments under section 7-E for the Individuals for the Tax Year 2022 was issued on 03-10-2022, whereas the final SRO.1891(I)/2022 has been issued on 13-10-2022. Meaning thereby only 17-days’ time has been allowed to charge, deposit and file the returns which is insufficient as provided under law supra.

That, after the final notification vide SRO.1891(I)/2022 dated 13-10-2022 and insertion of new annexure of 7-E in return, which was issued late of three and half month after the final notification of return has opened a new set of requirement that require un-necessary data fields regarding the description/categories of property, locality details of property and detail of exempt properties.

READ MORE: FPCCI seeks statutory time for return filing after error removals

That, multiple SRO’s have been issued for valuation of properties under section 68 of the Income Tax Ordinance, 2001 consisting of thousands pages each SRO and frequently changed/amended and no updated separate list of SRO is available, which will also increase the risk of error and mistakes. In order to streamline the process and ease of taxpayer and legal fraternity; the FBR should issue a final amended notification enabling the taxpayer and tax advisors to complete their work.

Similarly, the draft SRO.1892(I)/2022 for further amendments in Income Tax Rules, 2002 for the Non-resident Ship Owner or Charterer, Non-resident Air Craft Owner or Charterer, Simplified Return of Income for Retailer having turnover less than 10 (Million), Simplified Return for Individual/AOP having turnover upto 50(Million) and changes in Computation of Income Tax Return for the Tax Year 2022 was issued on 13-10-2022, whereas the final SRO.1955(I)/2022 has been issued on 24-10-2022. Meaning thereby only 07-days’ time has been allowed to charge, deposit and file the returns which is insufficient as provided under law supra.

That the income tax return form introduced for SMEs sector has been issued on the IRIS system without sharing a Draft of the same as required under sub-section (2) of section 100E read with section 237 of the Ordinance. However, it has also been noted that the simplified return for SME uploaded without issuing the draft return, the same may lead to illegality. It is therefore, suggested that issue draft followed by final return be issued to meet with the requirement of law; enabling the taxpayers to avail the benefits for SME sector provided under section 2(59A) of the Ordinance.

That, the IRIS portal is calculating incorrect initial depreciation allowance on purchase of Plant & Machinery against the provisions, of section 23 read with the part-II, 3rd Schedule of the Income Tax Ordinance, 2001. In addition to aforementioned IRIS portal is also showing wrong written down balance on addition of fixed assets and calculating 50% on opening balance instead of addition of fixed assets during the year.

That, under the head of capital gains under section 37A of the Income Tax Ordinance, 2001 the adjustment of brought forward capital losses on listed securities cannot be calculated due to non-availability of column for incorporating the values/figures.

That, presently IRIS portal is calculating/charging the excess/ incorrect tax liability on income covered under section 153 of the Ordinance, on the basis of fixed/predefined wrong formulas due to which the taxpayers are bound to pay high tax instead of their actual tax liability, which is against the spirit of self-declaration and present scheme of law. De-freezing of attribution tabs and enabling the taxpayers to enter correct figures/data to filed their return in time may resolve the issue.

READ MORE: FBR advised to extend tax return filing date for three months

That, the IRIS is illegally requiring Commissioner’s approval in such cases, where revision of Income Tax Return is made within 60 without of filing of original return, which is against the provisions of section 114(6) of the Income Tax Ordinance, 2001.

That, another issue regarding the downloading of Computerized Payment Receipt (CPR), the system shows message “Challan / CPR does not Exist” against the valid CPR duly deposited in the national exchequer.