FBR Urged to Extend Tax Return Deadline Due to Challenges

Due to technical and legal difficulties with filing tax returns, tax bar associations, chartered accounting firms, tax counsellors, and tax specialists have petitioned the Federal Board of Revenue (FBR) for a delay in the deadline for filing income tax returns until October 31, 2023.

On September 24, the FBR sent system-generated SMS messages to every taxpayer. “Dear Taxpayer, if at all possible, file your income tax return for FY-2023. The deadline to submit a return is September 30, 2023, and it won’t be extended.

The FBR has been warned by the Karachi Tax Bar Association of a recent IRIS IT issue that hinders it from responding to notices.

The taxpayer’s inability to react to notices sent by IR Officers (IROs) after the Commissioner of Inland Revenue-Appeals (CIR-A) modified appeal orders is the subject of this newly discovered system flaw. As you are aware, when a CIR-A modifies an assessment order, the relevant IRO notifies the taxpayer for additional proceedings and at this time, there is no opportunity in the IRIS 2.0 for him to file a reaction or reply.

According to Farhan Tariq of FB Consultants, IRIS 2.0 is currently having technical problems. He specifically pointed out situations when some files open in the old format while others in the new format. Additionally, he mentioned that there are difficulties in modifying refunds from earlier tax years, and that the import feature for Tax Year 2022 portal data from earlier returns is not working as anticipated.

The Karachi Tax Bar Association also told the FBR Chairman that the information from the prior year’s wealth statement had mysteriously disappeared from the current year’s statement.

“This rapid adjustment has put taxpayers through an inconvenience that is without precedent. We’ve long believed that information technology (IT) should help to lighten the financial pressures placed on taxpayers. Unfortunately, it looks that IRIS 2.0’s current status is having the opposite effect by frustrating users,” the association continued.

When contacted, Asif S. Kasbati, Pakistan Business Counsel Core Tax Committee Member, explained that pursuant to section 118, both (a) individuals and associations of individuals with years ending between January 1 and December 31, 2022, and (b) corporations with years ending between January 1 and December 31, 2022, are required to file tax year (TY) 2023 returns on or before September 30, 2023, as required by law.

However, in accordance with the General Clauses Act, the due date would be Monday (October 2, 2023) because September 30, 2023, fell on a Saturday and was a public holiday.

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

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

ICAP Fiscal Laws Committee Member Kasbati explained that FBR & PRAL missed the deadlines for the Return Draft and the Final Draft. He said that by November 15, 2022, the FBR/PRAL was meant to upload a draft return form to IRIS, and by January 31, 2023, the final form was to be notified (and, to the extent that the Finance Act of 2023 alters the TY 2023, by July 7, 2023).

Despite this, there was a delay because the draft and final return forms weren’t released until June 19 and June 27, 2023, respectively (a delay of more than 6 months), and the PRAL had to wait before uploading the return forms to IRIS.

He noted that the PTBA Letter of 2.9.23 highlighted Resolution/Correction of Technical/Practical concerns/Problems & IRIS predefined formulae in the Income Tax Return/Wealth Statement Forms for Tax Year 2023 with regard to a number of concerns in the return and partially rectified.

In their letters, KTBA brought up a number of concerns with relation to IT returns. Because of this, the Wealth Statement and Section 7E problems were only fixed on September 2, 2023, despite promises to PTBA and other parties that the remaining problems would be remedied.

The law states that these problems should not have occurred if the FBR/PRAL had finished their planning at least three months prior.

The yearly sales tax return deadline is also on September 23, which will increase workload from September 23 to September 23. Kasbati also recalled this. IRIS was not working (like on August 15, 23) or only worked slowly for a period of time, and it is expected to work very slowly from September 27 to September 30, since the Taxpayers experience this problem practically every year and we are aware that IT system issues are still not completely rectified.

For TY 2023, it is anticipated that at least 5 million returns will be submitted.

Less than one million tax returns have reportedly been submitted thus far, according to Kasbati & Co, a tax consulting firm based in Karachi. The recent resolution of the Wealth Statement issue and the Section 7E difficulties, which were only resolved.

For TY 2023, it is anticipated that at least 5 million returns will be submitted.

As a compliant taxpayer, he advised that it is advised to submit an online extension application with a valid justification while keeping in mind section 119 of the Income Tax Ordinance 2001 in the absence of an extension circular.

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