Pakistan Tax Bar Association (PTBA) has raised serious concerns in the filing of the Income Tax Return for Tax Year 2022 including the valuation of properties, an inactive column for refund adjustment, the value of properties for calculation of deemed income, and a new Section 7E annexure.
In a communication to the Chairman Federal Board of Revenue (FBR) Asim Ahmad on Friday, the PTBA highlighted the challenges in filing Section 7E details and unresolved issues in the IRIS income tax return/wealth statement for the tax year 2022.
PTBA is of the view that the FBR has shifted/moved all its legal obligations/duties towards the taxpayers, becoming the office for reporting, holding the taxpayers’ refunds, creating illegal demands, using harsh recovery measures, charging heavy penalties, thrashing out the superior court decisions, illegal assessment on settled issues, and squeezing the existing taxpayers instead creating/providing opportunities for ease of doing business, facilitating the taxpayers, making a balanced tax policy, harmonizing tax laws, reducing the tax litigation, broadening the tax base, promoting the tax culture, and reducing the cost of doing business.
The aforementioned situation is a big question mark on the transparency and integrity of the FBR and also increasing the gap of trust, PTBA said.
PTBA said that it has already pointed out various technical and practical issues in the IRIS pre-defined formulas in the Income Tax Returns for Tax Year 2022 and it also endorses the stand/opinion/observations about the system highlighted by its regional affiliated bars. However, as far as filing Income Tax Return is concerned, tax machinery has not reached up to the mark to facilitate the taxpayers by providing error-free, flawless, and hassle-free tax return forms.
Similarly, the draft SRO.1829(I)/2022 for Tax Chargeable/Payments under Section 7E for the Individuals for the Tax Year 2022 was issued on 3rd October 2022 whereas the final SRO.1891(I)/2022 has been issued on 13th October 2022, meaning thereby only 17-days’ time has been allowed to charge, deposit, and file the returns which are insufficient as provided under law supra.
That, after the final notification vide SRO.1891(I)/2022 dated 13th October and insertion of the new annexure of 7E in return which was issued late by three and a half months after the final notification of return, has opened a new set of requirement that require unnecessary data fields regarding the description/categories of property, locality details of the property, and detail of exempted properties, said PTBA.
Amendment in SROs
PTBA highlighted that multiple SROs have been issued for the valuation of properties under Section 68 of the Income Tax Ordinance 2001 consisting of thousands of pages. Each SRO was frequently changed/amended and no updated separate list of SRO is available, which will also increase the risk of error and mistakes.
In order to streamline the process and ease of taxpayer and legal fraternity, the FBR should issue a final amended notification enabling the taxpayer and tax advisors to complete their work.
Issues with IRIS
The IRIS portal is calculating incorrect initial depreciation allowance on the purchase of plant machinery against the provisions of Section 23 read with Part-II, 3rd Schedule of the Income Tax Ordinance 2001. In addition to the aforementioned, the IRIS portal is also showing the wrong written down balance on the addition of fixed assets and calculating 50 percent on the opening balance instead of the addition of fixed assets during the year, said PTBA.
Under the head of capital gains under Section 37A of the Income Tax Ordinance 2001 the adjustment of brought forward capital losses on listed securities cannot be calculated due to the non-availability of columns for incorporating the values/figures.
PTBA highlighted that presently, the IRIS portal is calculating/charging the excess/incorrect tax liability on income covered under Section 153 of the Ordinance on the basis of fixed/predefined wrong formulas due to which the taxpayers are bound to pay a high tax instead of their actual tax liability, which is against the spirit of self-declaration and present scheme of law. De-freezing of attribution tabs and enabling the taxpayers to enter correct figures/data to fill their return in time may resolve the issue.
In light of the recommendation, PTBA requested that the taxpayers be provided the statutory period of clear 90 days for submission of their income tax returns from the day the return is complete and the portal is error-free.
