FBR urged to incorporate property valuation table into IRIS portal

KARACHI: Karachi Tax Bar Association (KTBA) has strongly urged the Federal Board of Revenue (FBR) to incorporate property valuation table in IRIS portal to automate tax calculation under Section 7E of the Ordinance.

In a letter sent to the FBR chairman, the KTBA said tax @ of 20 percent has been imposed on deemed income calculated at five 5 percent of Fair Market Value of capital asset situated in Pakistan. The fair market value has been defined in Section 68 of the Ordinance and has also been notified by FBR through number of SROs.

Therefore, it is recommended that such valuation table to be incorporated in the back end working of the income tax return after which the calculation of tax under Section 7E would be calculated automatically by IRIS system based on the description of property incorporated by the taxpayer in its wealth statement. This would ensure correct computation of tax under Section 7E of the Ordinance.

It said taxpayers and the legal fraternity are worried over the deletion of tab previously available in the return to claim adjustment of earlier refunds against the tax liability of the current year. The adjustment of refund against the payable tax is a fundamental right of a taxpayer and refund adjustment has always been provided in the return forms without any dispute, KTBA maintained.

It has been observed that IRIS web portal is presently computing and attributing income associated to provisions of Section 153 on certain predefined and programmed formula, which results in higher taxation on the same income.

Therefore, it is suggested that such taxpayers should be allowed to compute and attribute their incomes based on facts of their cases instead of prefixed tabs. Relevant fields for entering the figures should be relaxed and open, the letter said.

It said the tax payable by a person other than a banking and insurance company on profit on debt/interest income from government securities is 15 percent, which shall be final tax as envisages under clause 20 of Part III of Second Schedule of the Ordinance.

However, the said clause has been omitted through Finance Act 2022, which will be applicable from Tax Year 2023. Despite this fact, IRIS has been manned to calculate tax on such profit on debt/interest income as per normal slab rate thereby wrongly applying the changes made through Finance Act 2022 retrospectively in the TY 2022 as well.

Presently, IRIS on web portal is presently not catering the initial depreciation allowance @ 25 percent, allowed on purchase of plant and machinery under the provisions contained under Section 23, resulting in an incorrect computation of tax depreciation.

Copyright Business Recorder, 2022