Karachi, August 1, 2023: The Karachi Tax Bar Association (KTBA) on Tuesday brought to light critical errors and mistakes present in the income tax return forms for the tax year 2023.
The identified issues are causing difficulties for taxpayers in fulfilling their tax obligations on time, prompting the KTBA to urgently request the Federal Board of Revenue (FBR) to address the problems.
In a formal letter addressed to the high-ups of the FBR, KTBA President Syed Zafar Ahmed highlighted various flaws in the return forms and expressed grave concerns about the impact of these errors on timely tax compliance. Both tax filers and their consultants have been adversely affected, wasting valuable time in trying to navigate these issues.
READ MORE: Return Filing Deadline Looms: File Your Income Tax Returns by September 30
The main technical glitches and errors identified by the KTBA include:
1. Changes in the Return Not Highlighted: The issuance of the Draft Return for Tax Year 2023, with only a brief 7-day consultation period during the Eid-ul-Adha holidays, has made it difficult for stakeholders to identify irregularities. Furthermore, changes made in the return form have not been adequately highlighted, making it challenging to track and compare current and previous year returns.
2. Column for Adjustment of Brought Forward Capital Losses Missing: The absence of a column for adjusting brought forward capital losses under the head of capital gains is resulting in inaccurate tax calculations for capital gains.
3. Incorrect Tax Calculation on Profit on Debt: The IRIS portal is incorrectly calculating tax on profit/yield on certain financial instruments, violating relevant clauses of the Income Tax Ordinance, 2001.
READ MORE: From Non-Filers to Active Taxpayers: Pakistan’s ATL Hits 4.26 Million High
4. Erroneous Calculation of Depreciation: The Return of Income still restricts depreciation to 50% despite the Proviso to sub-section 2 of section 22 of the Income Tax Ordinance, 2001 being omitted through the Finance Act, 2022.
To address these issues, KTBA has proposed necessary amendments, including:
1. Adjustment in Wealth Reconciliation Statement: An option to provide explanations and add more line items for adjustments in the Wealth Reconciliation Statement to avoid unnecessary show cause notices.
2. Primary Information of Bank Account on the Face of Wealth Statement: Mandatory information like Bank Account Number, which is currently missing from the Wealth Statement, should be included to prevent confusion and avoid unwarranted show cause notices.
3. Primary Information of Tax Deduction at Source Not Appearing on the Face of the Return: Similar to the Wealth Statement, essential information related to tax deducted or collected at source should be visible on the face of the return to prevent confusion and show cause notices.
READ MORE: Super Tax Implemented on Stock Investors by NCCPL
4. Auto Generated PSID for Capital Value Tax on Foreign Assets: An option for auto generation of PSID for payment of Capital Value Tax on Foreign Assets should be made available on the IRIS platform.
5. Auto Import of Wealth Reconciliation Statement: Wealth Reconciliation Statements should be automatically imported from the previous year’s return to streamline the filing process.
6. Inclusion of Attributes in Printed PDF: All sections and attributes should be included in the printed version of the PDF to avoid omissions and discrepancies.
READ MORE: FBR Issues Updated Tax Law for Treatment of Black Money in Pakistan
The KTBA has urgently requested the FBR to take immediate action in resolving these issues to ensure that taxpayers can file their returns and wealth statements without any hindrance. They emphasize that proper legal time for compliance should be allowed as per the statute after addressing these anomalies, and the return forms must be reissued after all necessary corrections have been made.
