Karachi, April 21, 2025 – The Karachi Chamber of Commerce and Industry (KCCI) has strongly criticized the Federal Board of Revenue (FBR) for declaring numerous taxpayers inactive, even after officially extending the deadline for filing sales tax returns for February and March 2025.
KCCI President Muhammad Jawed Bilwani expressed serious concern over what he termed as a gross administrative failure on the part of the Inland Revenue Service (IRS). He emphasized that this abrupt classification of taxpayers as “non-active” was unjust and damaging for the business community, especially when the delay in filing was due to officially sanctioned extensions.
READ MORE: FBR Extends February, March Sales Tax Return Filing Deadline
“It is highly disappointing that despite the FBR’s extension, compliant taxpayers are being penalized for circumstances beyond their control,” said Bilwani. “Such inconsistency in enforcement is causing significant distress among businesses and eroding trust in the tax system.”
According to KCCI, the FBR’s recent decisions indicate that the tax infrastructure is under tremendous stress. The chamber pointed out that the introduction of complex new requirements—such as mandatory eight-digit Harmonized System (H.S.) codes, strict unit measurements, and additional annexures like ‘H-1’, ‘J’, and ‘C-1’—has overwhelmed both the system and taxpayers.
Bilwani noted that these changes disproportionately affect local manufacturers, many of whom struggle to correctly identify and apply H.S. codes to their products. “Imported goods have clear Goods Declarations, but domestic producers are left guessing,” he said. “The same product being listed under different codes by different suppliers only adds to the confusion.”
KCCI proposed a solution: allow taxpayers to describe their goods and let the system suggest the most appropriate H.S. code automatically. This would reduce misclassification and standardize entries, making compliance easier.
Bilwani also criticized the system’s rigidity in unit measurement inputs. “Why restrict entries to kilograms only?” he questioned. “A dropdown menu offering multiple standard units would simplify data entry and minimize rejection errors.”
He further objected to the sudden implementation of new annexures mid-year without proper guidance. “Annex ‘J’ and ‘H-1’ should be introduced gradually, with awareness sessions to educate taxpayers, rather than enforced abruptly.”
KCCI demanded an immediate correction of the system to reflect the extended deadlines and urged the FBR to adopt a more business-friendly, technology-oriented approach. “Punishing taxpayers despite compliance defeats the purpose of reforms,” said Bilwani. “The FBR must engage with KCCI and other stakeholders to ensure clarity, consistency, and fairness for all taxpayers.”