FBR Issues SOPs for Deregistration of Deceased Taxpayers

The Federal Board of Revenue (FBR) has issued a Standard Operating Procedure (SOP) for the deregistration of NTN/STRN of deceased taxpayers.

In compliance with the Hon’ble FTO’s Recommendation in complaint no 1345/ISB/ST 2023, FBR  has issued a Standard Operating Procedure (SOP) for the deregistration of NTN/STRN of deceased taxpayers. Briefly, Col Abdul Majid demised on 2nd September 2009 and the same was notified to FBR on 29th June 2009 along with the death certificate.

After demise, a return of Tax Year 2008 was submitted and thereafter wealth returns were submitted against Tax Year 2009 wherein inheritance was shown distributed with the net amount of Rs. 5392/- as balance on 30th June 2009 and was duly acknowledged by FBR in 2009.

According to the complainant’s son, no notice regarding returns was received from 2010 till 2017 but with the advent of IRIS in 2014 notices u/s 114(4) were issued on 23rd/24th August 2017, and 13th March 2020 against Tax Years 2015 to 2017 respectively despite that there was no income or assets in the name of deceased (complainant father).

Thereafter notices were issued on 30th May 2019 and 7th March 2020 for Tax Years 2018 to 2020; to which tax returns were duly submitted and acknowledged by FBR. In all the submitted returns against the notices, income and total assets against the deceased were shown as NIL.

The department filed written comments wherein, they stated that the content of the complainant has been examined in detail and found genuine. Therefore, the registration of the complainant is canceled under Rule 82(5) of the Income Tax Rules, 2002 through IRIS dated 31.03.2023. Copy of the deregistration order was also received along with para-wise comments which were examined and placed on file.

During the hearing, the Complainant’s son stated that it appears that the IT system of the department is not fully integrated as it has substantive missing links that do not delete NTN/Registration despite a legal order having been made in IRIS by the concerned Commissioner. IR.

After hearing, the Hon’ble FTO  recommended: “FBR is required to revisit the entire scheme of deregistration of deceased persons and formulate a dedicated SOP in this regard specifically removing any system-based glitches that hamper the deletion of NTN /Registration despite legal orders having been made in IRIS by the concerned IR authority and  Report Compliance within 120 days”.

Based upon FTO’s recommendations FBR has issued the following Standard Operating Procedure:

• Verification of the death certificate and other relevant documents: Obtain an official death certificate from the concerned authorities (i.e. NADRA). Ensure that the death certificate contains accurate details of the deceased individual such as name, CNIC  number, and date of death.
• Change of status in IRIS as “verified as Deceased” by the commissioner: Once the concerned commissioner verifies the necessary documents, he will modify the form of registration of the taxpayer by marking his status as “verified as deceased” and the subsequent steps for recovery of outstanding liabilities shall follow
• Discharging any outstanding liabilities or obligations of the deceased taxpayer: The concerned CIR shall evaluate any outstanding tax liabilities, penalties, or obligations that the deceased taxpayer may have owed and proceed for the recovery of the same as stipulated in section 87 of the income tax ordinance 2001. The outstanding liabilities for the purpose of sales tax may be determined in terms of Rule 11(4) of the Sales Tax Rules, 2006 of the deceased taxpayer and to be recovered.
• Order of cancellation of registration of NTN/STRN: The concerned CIR shall issue an order for the cancellation of registration or NTN and STRN of a deceased person in IRIS, as per Rule 82 (5) of Income Tax Rules 2002 and under Rule 11 of the Sales Tax Rules 2006 after verifying the death b certificate and other relevant documents.
• Updating the taxpayer’s status in IRIS and related databases: After issuance of order of cancellation of NTN/STRN, the concerned CIR shall forward the same to LRO (Local Registration Officer) to update the taxpayer’s status as “deceased” in the IRIS system and other related databases and to remove the taxpayer’s details from active taxpayer lists.
• Communicating the deregistration to legal heirs or representatives of the deceased taxpayer:  The concerned CIR shall formally notify the legal heirs or representatives of the deceased taxpayer about deregistration along with a copy of “Order of cancellation of Registration of NTN/STRN.