Extension applications galore: FBR declares thousands of taxpayers as ‘inactive’

ISLAMABAD: In a clear violation of fiscal laws, the Federal Board of Revenue (FBR) has arbitrarily declared thousands of taxpayers as inactive on the very first day of November 2025 including those applied for extension on October 31st.

This action has been taken despite the fact that numerous applications seeking extensions in time were duly filed and are still pending adjudication under the law. Without rejection of these applications, the FBR cannot unilaterally change the status of compliant taxpayers to inactive.

Till now, the manual income tax return has not been uploaded by the FBR despite the expiry of deadline for filing of income tax return.

FBR Member Inland Revenue Operations has been requested by genuine aggrieved taxpayers across Pakistan to restore their “Active” status, who have timely applied for extension in filing of returns and their applications have not been decided by the field formations.

Income tax returns reach 5.9m mark: PM asks FBR not to give blanket extension

Taxpayers have also requested FBR Member Inland Revenue Operations that many taxpayers have genuinely filed applications for extension due to technical issues and applications must be rejected before changing their status from Active to Inactive. The taxpayers who timely applied for extension cannot be treated like the same who did not apply for extension.

Butt informed that the office of the Federal Tax Ombudsman (FTO) needs to immediately take suo motu notice of his maladministration of the FBR.

Earlier, in response to blatant defiance of FTO’s lawful orders, Waheed Shahzad Butt had requested the FTO to initiate contempt proceedings against the FBR officials for failing to timely upload manual/paper income tax returns for Tax Year 2025 but to no avail.

He emphasized that this episode stands as yet another worst example of elite capture, which continues to corrode and cripple the taxation system of Pakistan. Earlier episode of changes in wealth statement form and timely intervention by FTO is a rare instance of inefficiency, incompetency and maladministration of justice. FTO’s key recommendations to the FBR were to upload and notify the manual/paper income tax return for the Tax Year 2025 but nobody is willing to accept the naked truth at FBR.

The FTO order stated, “The complainant stated that as per rule 73(2DD) of Income Tax Rules 2002, it is mandatory to e-file the income tax return if an individual taxpayer has taxable income one million rupees or more. Accordingly, other taxpayers having less income than Rs. 1,000,000 are required to file manual income tax returns. However, the FBR did not issue the manual return form for tax year 2025 for the eligible taxpayers.

The latest screen shot of the income tax returns up to 2024 has been placed. The FBR has failed this time to upload or notify the manual/paper return for the tax year 2025. The FBR should immediately ensure upload of the manual/paper tax return for tax year 2025, the FTO order added.

Copyright Business Recorder, 2025