Taxpayers across Karachi are facing undue stress as they continue to receive auto-generated notices for filing income tax returns of previous years, despite the Federal Board of Revenue (FBR) assuring that such notices would only be issued after scrutiny by the Commissioner Inland Revenue.
The Karachi Tax Bar Association (KTBA), in a letter addressed to the Member Inland Revenue (Operations) on Friday, raised concerns about this issue, which was initially resolved in November 2020. The tax bar emphasized that taxpayers, particularly first-time return filers, are being inundated with computer-generated notices for multiple years, creating unnecessary complications.
The KTBA reminded the FBR that the matter had been discussed and settled during a meeting held on November 17, 2020, at the FBR House in Islamabad. During this meeting, the Member (Operations) explicitly directed that notices should not be auto-generated. Instead, such notices should only be issued if the Commissioner concludes that a taxpayer needs to furnish returns for years other than the one for which they have already filed.
“It is, however, unfortunate that despite your assurance and verbal instructions, the practice of issuing notices under Section 114(4) by the FBR’s field formations for multiple tax years remains unaddressed,” the KTBA highlighted in its letter. This issue, the KTBA noted, disproportionately affects new taxpayers and first-time filers, who find themselves in a catch-22 situation as they receive multiple notices on the IRIS portal for filing returns for previous years.
The KTBA further identified several problems arising from this practice:
1. Taxpayers lack an option in the IRIS system to respond to notices issued under Section 114 of the Income Tax Ordinance, 2001.
2. Notices under Section 114(4) are issued for preceding tax years immediately after a new taxpayer registers on IRIS.
3. Non-Resident Pakistanis, filing for the first time, are also subjected to these notices for previous years.
4. Penalty notices for non-filing of past returns are being issued, exacerbating taxpayers’ distress.
The KTBA urged the Member Inland Revenue to intervene urgently and resolve these issues, emphasizing that these practices undermine taxpayer confidence.
Finally, the KTBA assured the FBR of its continued commitment to fostering collaboration and bridging the gap between taxpayers and tax collectors to improve compliance and facilitation.