Karachi, September 3, 2023 – The Pakistan Tax Bar Association (PTBA) has strongly criticized the Federal Board of Revenue (FBR) for implementing unauthorized changes to the tax return filing system, causing significant challenges for taxpayers as the September 30, 2023 deadline approaches.
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The PTBA, a leading voice in Pakistan’s tax community, voiced its concerns through a letter sent to the FBR Chairman on September 2, 2023. The association highlighted serious issues surrounding the legality and functionality of the online return filing forms.
The tax year 2023 return form was officially notified through SRO 746(I)/2023 on June 19, 2023, while the final return was specified through SRO 778(I)/2023 on June 27, 2023. However, the return form uploaded on the portal was marred by deficiencies. The PTBA raised these concerns with relevant authorities multiple times, but the issues persist. Moreover, the PTBA decried the continuous and unnotified changes to return/statement forms on the portal, emphasizing their illegality, and the potential for prolonged litigation.
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A significant point of contention was a sudden change on September 1, 2023, where the IRIS module on the portal was modified, mandating taxpayers to calculate their tax liability under Section 7E of the Income Tax Ordinance, 2001. The PTBA categorically labeled this alteration as illegal and unauthorized.
The PTBA articulated several key grievances:
1. The uploaded return for Tax Year 2023 remains error-prone, with unauthorized changes occurring frequently, violating Income Tax Rules, 2002.
2. The forced inclusion of Section 7E calculations is deemed unlawful and without legal basis.
3. Changes to property (capital assets) declarations after income tax returns have been submitted are both incomprehensible and illegal, potentially leading to civil and criminal liability for the FBR.
4. The PTBA emphasized that the Form of 7E related to immovable properties is an independent entity, and the FBR cannot compel taxpayers to pay it mandatorily for filing income tax returns.
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5. Section 7E’s legality has been challenged in various High Courts, with conflicting outcomes. The FBR’s actions could be considered contempt of court until resolved.
6. The PTBA noted that the contents of FBR’s Circular No.03 of 2023/24 had been suspended in Punjab due to a Lahore High Court judgment, further highlighting the unlawful nature of the changes.
7. The new IRIS portal experienced login, password, and pin code problems.
8. The portal’s data-saving issues could lead to increased errors and mistakes.
9. Special Tax Year information for Tax Year 2023 is absent on the new IRIS portal.
10. The portal fails to retrieve complete data from previous years, leading to various errors.
11. Incorrect depreciation calculations were found in the portal regarding section 23 of the Income Tax Ordinance, 2001.
12. The IRIS portal erroneously charges excessive tax liability under section 153 of the Ordinance due to incorrect formulas, deviating from the self-declaration spirit of tax law.
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13. Commissioner’s approval is unjustifiably required for revisions made within 60 days without filing the original return, contravening section 114(6) of the Income Tax Ordinance, 2001.
14. Incomplete data appears when downloading from MIS tab under various tax deduction at source sections.
15. Challan generation for withholding income tax remains slow, necessitating a streamlined process within the IRIS e-portal.
16. Issues persist with downloading Computerized Payment Receipts (CPR), falsely indicating non-existence of valid CPRs.
In light of these concerns, the PTBA called upon the FBR Chairman to personally address these issues urgently and grant taxpayers a clear 90-day extension to file their annual income tax returns through a functional and error-free portal.
