Here is Why FBR Was Legally Bound to Extend Deadline for Tax Returns

The last date for filing income tax returns ended yesterday but only up to five percent of the total taxpayers could submit their income tax returns. This forced the Federal Board of Revenue (FBR) to extend the deadline.

The revenue board has now advised taxpayers to file their returns by 31st October 2019. While the filers have got a reprieve for another 31 days, let us dig out the reasons that led FBR to take this decision.

According to the Pakistan Tax Bar Association (PTBA), FBR’s negligence caused the delay in the manual and online filing.

On September 27, the association wrote a letter to FBR and mentioned various discrepancies in the process which could potentially cause a delay in the return filing process.

PTBA started by saying that the FBR delayed the issuance of return forms because it was working on an online application to make filing easy. The revenue watchdog uploaded the online return form on August 23, 2019, and issued the final notification for salaried individuals & Association of Persons (AOPs), on 2nd September.

While it issued the manual form just three days before, on September 27, which is still not available in Excel format, pointed out PTBA in a letter sent to FBR.

“All this shows the lapse of statuary period of two months (62 days), and it was all due to the negligence of the FBR,” PTBA said.

The tax bars association also highlighted various discrepancies which, according to them, were potential causes of delay in tax returns filing.

The association pointed out that:

  1. The FBR has unduly accompanied the Statement of Final Taxation (for salaried individuals and AOPs) with Wealth Statement. It says the Wealth Statement is a separate requirement under Section 116 of the Income Tax Ordinance.
  2. Wealth Statement and details of personal expenses have been made compulsory for non-residents which is not legally binding.
  3. Important information such as assets/liabilities in Wealth Statement for salaried individuals is missing, which is against section 116 of the Ordinance.
  4. Section 104 and Section 103 (8) of the Ordinance, which allowed computation of foreign income/ loss and adjustment, has been replaced with a single field/ column for foreign income; hence, no changes can be added. The move is feared to add extra burden on taxpayers.
  5. Foreign incomes can no longer be declared under their respective heads of income; instead, only figures sums could be mentioned. It will not paint a clear picture of the foreign income of individuals.
  6. IRIS system is faulting on tax calculation on the income of more than Rs. 1,200,000.

In the given scenario, the FBR could not help but extend the deadline to meet the revenue collection target.

It should be noted here that as of September 29, the revenue board had only received up to 5 percent tax returns. According to tax experts, the law allows ninety (90) days as a statutory time for filing of income tax returns under section 118 of the Income Tax Ordinance, 2001 and rule 34 of the Income Tax Rules, 2002.

Contrary to that, only 28 days were given (between September 02 and September 30) for online filing while only one working day was available for manual filing.

  • Companies that, as of September 30, “failed to file their income tax returns/statements, though have paid ninety five per cent of the admitted tax liability, are hereby allowed to file their returns/statements by 31st October 2019.”

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