FBR Asked to Extend Income Tax Return Filing Deadline As Experts Cite Technical and Legal Challenges

Tax Bar Associations, chartered accountant firms, tax advisers, and tax experts have approached the Federal Board of Revenue (FBR) for an extension in the last date for income tax return filing up to October 31, 2023, due to technical and legal issues in return filing.

Last week, the FBR issued system generated-SMS to all the taxpayers on September 24 “Dear taxpayer, please file your income tax return for FY-2023 at the earliest. The last date to file a return is 30th September 2023, which will not be extended.”

The Karachi Tax Bar Association has informed the FBR about a new IT glitch in IRIS, which prevents it from responding to notices

This new glitch in the system has emerged recently and pertains to the inability of the taxpayer to respond to notices issued by IR Officers (IROs) following the modifications of orders in appeal orders by the Commissioner Inland Revenue- Appeals (CIR-A). As you would know after a CIR-A modifies an assessment order, the concerned IRO issues a notice to the taxpayer for further proceedings, for whom there is currently no option available within the IRIS 2.0 to submit his reply or response.

Farhan Tariq of FB Consultants told ProPakistani that IRIS 2.0 is currently experiencing technical issues. Specifically, he highlighted instances where certain files are opening in the previous format, while others are displaying the new format. Additionally, he noted that the import feature for Tax Year 2022 portal data from previous returns is not functioning as intended, and there are challenges in adjusting refunds from previous tax years.

FBR Chairman was also informed by the Karachi Tax Bar Association that the data from the previous year’s wealth statement was suddenly absent/removed from the current year’s statement.

“This abrupt change has created unparalleled hardship and is causing inconvenience for the taxpayers. We have always held the belief that Information Technology (IT) should serve to alleviate the burdens of taxpayers. Unfortunately, the current state of IRIS 2.0 appears to be doing the opposite by causing frustration,” added the association.

When contacted, Asif S Kasbati, Pakistan Business Counsel Core Tax Committee Member, elaborated that as per section 118, (a) Individuals & Associations of Persons having the year from July 1, 2022, to June 30, 2023 and (b) Companies having year-end between January 1, 2022 to December 31, 2022 are required to file tax year (TY) 2023 return on or before September 30, 2023 as per law.

However, owing to September 30, 2023 falling on Saturday, being a public holiday, the due date would be Monday (October 2, 2023), keeping in view the General Clauses Act.

Kasbati anticipated an extension in the return filing date up to October 31, 2023, owing to 4 major reasons:

  1. Return Draft & final deadlines missed by FBR & PRAL;
  2. Several Issues in Return and partly resolved
  3. Expected Load on IRIS
  4. Less than 1 million Returns filed for TY 2023 while about 4.8 million returns filed for TY 2022 filed while Quantity Matter.

Kasbati, ICAP Fiscal Laws Committee Member elaborated that the Return Draft & final deadlines were missed by FBR & PRAL. He stated that the FBR/PRAL was supposed to upload draft return form on IRIS by November 15, 2022 and the final one to be notified by January 31, 2023 (and to the extent of Finance Act 2023 changes about TY 2023 by July 7, 2023).

In spite of the same, there was a delay as the draft and the final return form were issued on June 19 and June 27, 2023, respectively (over 6 months delay) and the return forms were uploaded on IRIS thereafter by the PRAL.

Regarding several issues in return and partly resolved, he stated that through PTBA Letter of 2.9.23 highlighted Resolution/Correction of Technical/Practical Issues/Problems & IRIS predefined formulas in the Income Tax Return/Wealth Statement Forms for Tax Year 2023.

KTBA raised several issues regarding IT returns in their letters. As a result, the Wealth Statement and Section 7E issues were only resolved on September 2, 2023, while assurances were given to PTBA, etc., that the remaining issues would be addressed.

According to the law, these issues should not have arisen had the FBR/PRAL completed their preparations at least three months in advance.

Kasbati also recalled that ” The annual sales tax return deadline is also on 30.9.23 which will increase workload from 27.9.23 to 30.9.23. IRIS was not working (like 15.8.23) or slow for a certain day and is likely to be working very slowly from 27.9.23 to 30.9.23 as the Taxpayers face this issue almost every year; as we understand that IT system issues are still not fully resolved.”

It is expected that a minimum of 5 million returns will be filed for TY 2023.

Kasbati & Co, a Karachi-based tax consultant, expects that fewer than one million tax returns have been filed so far. This expectation is primarily due to the recent resolution of the Wealth Statement issue and Section 7E issues, which were addressed only on September 2, 2023. Consequently, the FBR would prefer not to have 80% of taxpayers classified as non-compliant.

He also predicted that “Phase-wise Extension like last year TY 2022 and several issues as mentioned above, we can safely predict that the FBR will extend the deadlines till November 30, 2023, however, as a first step, will grant general extension to October 31, 2023.”

Given the aforementioned circumstances, Kasabti recommends submitting your Income Tax Return as soon as possible by September 30, 2023, to avoid any Default Surcharge, Penalties, and notices. This advice is in line with the FBR’s SMS notifications to taxpayers, which clearly state that no extension will be granted.

Furthermore, it’s worth noting that FBR Offices and Departments will remain open on September 30, 2023, until 8 p.m., despite it being a Saturday, as per the FBR Circular.

As a compliant taxpayer, he suggested that in the absence of an extension Circular, it is recommended to submit an online extension application with proper reason keeping in view section 119 of the Income Tax Ordinance 2001.

  • Unfortunately the agony is people are informing about 7E issue and confusion from weeks and not even a single time fbr clarify neither they fix anything. And when people failed to comply because of fbr incompetency the same department will issue notices which also not fixed yet.

    • How an open plot can be “deemed” to have earned 5% income? Addition to other issues in 7e ?

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