Tax bar seeks end to IRIS notices

KARACHI: The Pakistan Tax Bar Association (PTBA) has asked the Federal Board of Revenue (FBR) to stop sending notices to non-filers who have discontinued their business and filed their tax returns accordingly.

In a letter to the FBR chairman, the PTBA said that the FBR’s online system, IRIS, was issuing notices to non-filers under section 114 of the Income Tax Ordinance, 2001, even if they had submitted a notice of discontinuation under section 117 of the same ordinance.

Section 114 empowers the commissioner to issue notices to non-filers who have not filed their income tax returns for the current or any previous tax year. Section 117 requires a person discontinuing his business to furnish a notice to the commissioner within 15 days of the discontinuation and file a tax return for that tax year as a separate tax year.

The PTBA said that the IRIS system was not recognising the notices and returns filed under section 117 and was generating notices for future tax years, causing hardship to the taxpayers who had complied with the law.

"After the implementation of IRIS certain compliance requirements are purely system based. As per Section 117 of the ordinance, which clearly stipulates a person discontinuing his business will furnish a notice under this section to the commissioner within 15 days from the discontinuation."

"Therefore, after the implementation of IRIS, if the taxpayer submits such notice under section 117 of the Ordinance, and files their tax return for that tax year treating it as a separate tax year for the purposes of this ordinance, even in such cases the system has issued auto generated notices for future tax years and the same is creating hardship to the taxpayer who one way or the other had complied with the provisions of the ordinance."

The PTBA recommended that the IRIS system be upgraded and no future notices be issued to those who had filed notices and returns under section 117. It also suggested that the FBR should issue notices under section 117 if it needed to inquire about any information related to the discontinuation of business.