‘Return filing system is cumbersome, time-consuming’

President Muhammad Zubair Ahmed at Karachi Tax Bar Association, in an interview, threw lights on issues faced by the taxpayers in filing returns and recommended solutions.
Q: Who is required to file tax return?
MZ: According to the Section 114 of the Income Tax Ordinance, 2001, those who are required to file income tax returns include a company or a person (other than the company) whose taxable income for year exceeds the maximum amount that is not chargeable to tax; non-profit organisation; welfare institution; persons claiming loss carried forward; one who owns immovable property with specified area or a motor vehicle having engine capacity above 1,000cc; holder of commercial or industrial connection; a person registered with any chamber of commerce and industry, market committee, Pakistan Engineering Council, Pakistan Medical and Dental Council, Provincial Bar Council; Institute of Chartered Accountants; and Institute of Cost and Management Accountants of Pakistan.
Q. What is your estimate of returns filing?
MZ: It is difficult to estimate. But it should be far better than the existing number of annual returns filed by the taxpayers. There are different estimates that it should be in millions against the present below one million.
Q. Do you think people are reluctant to file returns because of the present filing system?
MZ: There are many reasons of low number of returns filing. But, the challenging return filing environment introduced by the FBR (Federal Board of Revenue) is creating problems for the filer. Last year, IRIS (integrated risk information system) was introduced for income tax return filing but due to several problems the FBR extended dates several times.
This year again KTBA highlighted multiple issues; some of which were resolved. Due to these problems, FBR had already extended the date for return filing for the tax year 2015. The issues are not alone with the income tax return filing. The taxpayers are also facing difficulties in filing sales tax return/statements/challan, advance tax statement due to malfunctioning of IRIS.
Q. Why isn’t the system operating properly?
MZ: The present IRIS system is cumbersome, difficult and time- consuming. It takes a lot of time for the taxpayer and tax consultant to understand the system, a fact which should not be ignored. The FBR introduced several modules for registration in income tax and sales tax for new and existing taxpayers but for the modules the proper guidelines are not issued by the FBR. For instance, in new registration in income tax by an individual a phone set, a SIM on owner’s name is required for receiving code sent at the time of registration. Those persons using other’s cell numbers will not able to receive the code. Further, if the person obtains SIM then he has to wait at least one month to subscribe on the FBR portal. There are issues of registration with non-resident as they don’t have cell number at all. The FBR’s web portal suddenly becomes non-responsive causing problems for return/statement filers. There are many other technical issues which have already been communicated with the FBR.
Q. So you think that the IRIS is a total failure?
MZ: The concept of IRIS is brilliant to integrate information of all taxes. But the way the FBR is running it makes the system problematic. When the FBR issued return filing system under Pakistan Revenue Automation Pvt Limited System it had taken on board the bar and tested all the requirements for filing income tax return. Now, the present state is entirely different. The abrupt changes on IRIS without information are causing more irritants. The FBR should have to run the new system for a trial period along with running the old system to facilitate the taxpayers.
Q. Which issues has the tax bar raised about the FBR’s support system?
MZ: In the past, the FBR deployed tax facilitation desks across the country to facilitate the taxpayers. However, after the launch of online system the facilitation lacks standards. The staff posted at tax facilitation centers is unaware about the technicalities causing problems for taxpayers. There is a poor performance of support at the online system. There is long wait for a call or the call is, most of the times, unanswered, sometime the call is responded by a direction to send email and there is no immediate answer by e-support in response to email sent.
Q. What are your recommendations to improve the system?
MZ: The FBR should take on board the stakeholders before introducing changes on IRIS. Every time, with the new update and additions in software, a support guide or a tutorial should be presented to the taxpayers. A video tutorial should be issued in this case. It will be very helpful with new modification in the system.
After raising issues several times before the FBR and after having no answer the bar now wrote to the finance minister to take measures in facilitating the taxpayers. We have urged the finance minister to direct the FBR to extend the date of filing/e-filing for at least two months to facilitate the taxpayers. On the FBR side, the final tax return forms were issued on September 1, 2015 but the tax return forms, including the IRIS system, still contain so many ambiguities. Since the final return form should be issued on July 1 and taxpayers, having last date of August 31, be given three months to file annual return. As the return form is issued in the first week of September, last date for taxpayers due on August 31 and September 30 should be extended by a month each.
Q. Why are you insisting on deadline extension?
MZ: Through Finance Act, 2015 the late filers will be selected for audit automatically. Therefore, taxpayers should not suffer due to inefficiency on the FBR side.