Tax authorities likely to incur financial losses

Error in FBR’s online filing system

KARACHI: A computational error in the online return filing system of the Federal Board of Revenue (FBR) is likely to render financial losses to the tax authorities, a tax expert said; although the FBR is content with the system’s functionality.  

“There is a calculation problem in the Iris for import tax,” said Rehan Hassan Jafri, president of Karachi Tax Bar Association (KTBA).

The taxpayers are feeding tax deducted at import stage on their income tax return forms for the tax year 2016. 

“But, the (online) system instead of accepting the liability is creating refunds for taxpayers, which will cause losses to the FBR,” said Jafri.

A senior official at the FBR, however, said the Iris is working as usual and people are filing their returns. 

The official said taxpayers and tax bar members spotted some problems, “which have been rectified.”

The tax deducted under Section 148 of Income Tax Ordinance, 2001 is final for taxpayers, which means there will be no additional tax and audit exemption.

Several categories of taxpayers fall under this final tax regime.

They include businesses from steel, urea, gold, cotton and liquefied natural gas sectors. Further importers of pulses and other products and ship breakers also fall under the final tax regime.

The extended tax return filing date for salaried, business individuals, persons falling under final tax regime and companies having special tax year is expiring on October 31. 

Jafri said the issues have already been discussed with the FBR, “but, they are yet to be resolved.”

The tax expert said the Iris is also not showing feeding area for withholding tax deduction against cash withdrawal.

The deduction against cash withdrawal is adjustable for income tax return filers of a previous tax year.

“If persons failed to feed deducted tax (data), then they will not be able to claim adjustment or refunds,” Jafri said.

He said KTBA has complained to the FBR about the frequent downtimes of its web portal, which create difficulties for return filers. 

“After Ashura (Muharram) holidays, the Iris software was daily shut down for two to three hours,” he added.

The coming week, Jafri said is crucial as taxpayers will rush to file their returns on fast-approaching deadline. “If present situation persists it will be difficult for the FBR to increase the number of return filers,” he added.