FBR advised to fix issues for smooth filing of tax returns
The Pakistan Tax Bar Association (PTBA) has urged the Federal Board of Revenue (FBR) to fix the issues in the Iris portal for smooth tax filing for the 2022 tax year.
In a letter sent to the President of the FBR, the PTBA indicated that taxpayers should benefit from the legal deadline of 90 clear days for the submission of their tax returns from the day the Iris – the portal – is error-free.
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The Supreme Tax Bar stated that with respect to the filing of tax returns for the 2022 tax year, it endorsed the observations regarding system errors/issues highlighted by the affiliated regional bars, including the Karachi Tax Bar Association (KTBA).
“So far, the current IT team has failed to deliver an efficient, user-friendly and hassle-free IT system in a professional manner,” he added.
The PTBA informed the President of the FBR that according to the law, the taxpayer has the right to request an adjustment of his previous refunds against the tax payable for the current tax year, but the corresponding column for the refund adjustment has been unlawfully locked which is contrary to fundamental rights and present legislation under the Income Tax Order 2001.
Similarly, the draft manual declaration of income for individuals and associations of persons (AOP) for the tax year 2022 was published no later than August 26, 2022, while SRO 1733(I)/2022 final was published on September 13. , 2022. “This means that only 17 days were allowed to file manual returns, which is insufficient as required by law,” the PTBA pointed out.
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He further pointed out that the tax declaration form introduced for the SME sector was issued on the IRIS system without project sharing, which is mandatory under the law. “The simplified declaration for SMEs uploaded without issuing the draft declaration, it may lead to illegality,” said the PTBA and suggested that the issuance of a draft followed by the final declaration be issued to meet the requirements. of the law.
The PTBA stated that the IRIS portal calculates an incorrect normal and initial depreciation allowance on the purchase of plant and machinery with respect to the provision of Article 23 read with Part II of the Third Schedule of the Ordinance of 2001 on income tax.
The IRIS portal calculates the incorrect/excess tax liability on the gain on the sale of immovable property in breach of Section 37(1A) of the Income Tax Order 2001.
It should be noted that the rate of collection of tax under Section 153(I)(c) for individuals and AOP contractors is 7%, which is the minimum tax. “In the relevant part of the operating statement of attributable income, there is no line with a tax rate of 7%, nor does the system allow the credit of said deduction.
Currently, the IRIS portal calculates the incorrect tax liability on income covered by Article 153 of the Ordinance, based on incorrect fixed/predefined formulas due to which taxpayers are liable to pay high tax instead of their real tax liability, which is against the spirit of self-declaration and the current regime of the law. “Unfreezing the allocation and allowing taxpayers to enter correct numbers/data to file their return on time can solve the problem,” the PTBA suggested.
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The tax bar at the top pointed out that the IRIS portal calculates incorrect tax on Bahbood certificates on profits / returns / retiree’s benefit account / Shuhada family welfare account, while clause (c) of sub- Section (I) of Section 39 provides that the tax shall not exceed 10 per cent of such profit/return read with clause (6) of Part III of the Second Schedule to the Taxation Ordinance 2001 income tax.
The IRIS portal treats normal income for the tax year 2022 instead of final income to interest/profits on debts on public securities in accordance with clause (20( of part III of the second schedule of the order on Income Tax, 2001, where that said clause has been omitted by the Finance Act 2022 and is applicable for the tax year 2023, which cannot be applied retrospectively.
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The PTBA said taxpayers in general and the legal fraternity in particular face acute hurdles in preparing tax payment disputes as the system response in this regard is very slow. “Most of the time it requires many attempts for tax challan preparation due to some website problem and tax challan preparation in one attempt is difficult and it is very common practice/problem that are faced by almost every taxpayer while preparing the tax challan, hence the website/system issue should be resolved immediately and sufficient lead time is also required for timely filing of returns.
Where a revised wealth statement under section 116(3) of the Income Tax Order 2001 for the tax year 2021 resulting in a change in the closing balance of wealth net for the 2021 tax year has been filed, the system does not carry forward the opening balance. net worth for the 2022 tax year (showing the opening balance of the opening statement of the net worth of the last year’s closing balance).
Finally, the PTBA highlighted the issue regarding the uploading of the Computerized Payment Receipt (CPR) and the statement that the system displays the message “challan/CPR does not exist” against the valid CPR duly filed at the Treasury.
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