ISLAMABAD: Tax bar associations, chartered accountant firms, tax advisers and tax experts have approached the Federal Board of Revenue (FBR) seeking an extension in the last date for filing of income tax returns up to October 31, 2023 due to technical and legal issues.
Talking to Business Recorder, Asif S Kasbati, a leading Karachi-based tax expert, explained the reasons behind the expected extension in date for filing income tax returns.
Last week, the FBR issued system generated-SMS to all the taxpayers, “Dear taxpayer, please file your income tax return for FY-2023 at the earliest. The last date to file return is September 30, 2023, which will not be extended”, it added.
Karachi Tax Bar Association has already informed the FBR that the new IT glitch in the IRIS is the inability to respond to notices. This new glitch in the system has emerged recently and is pertained to the inability of the taxpayer to respond to notices issued by IR Officers (IROs) following the modifications of orders in appeal orders by the Commissioner Inland Revenue- Appeals (CIR-A).
After a CIR-A modifies an assessment order, the concerned IRO issues a notice to the taxpayer for further proceedings, for whom there is currently no option available within the IRIS 2.0 to submit his reply or response.
FBR Chairman was also informed by the Karachi Tax Bar Association that the data from the previous year’s wealth statement is suddenly absent/ remove from the current year’s statement. This abrupt change has created unparalleled hardship and is causing inconvenience for the taxpayers.
We have always held the belief that Information Technology (IT) should serve to alleviate the burdens of taxpayers. Unfortunately, the current state of IRIS 2.0 appears to be doing the opposite by causing frustration.
When contacted, Asif S Kasbati, Pakistan Business Counsel Core Tax Committee Member, he elaborated that as per section 118, (a) individuals & Associations of Persons having year from July 1, 2022 to June 30, 2023 and (b) Companies having year-end between January 1, 2022 to December 31, 2022 are required to file tax year (TY) 2023 return on or before September 30, 2023 as per law.
However, owing to Sep 30, 2023 falling on Saturday, being a public holiday, the due date would be Monday (October 2, 2023), keeping in view General Clauses Act.
Kasbati anticipated extension in return filing date up to October 31, 2023 owing to the 4 major reasons:
(i) Return draft & final deadlines missed by FBR & PRAL.
(ii) Several issues in return, but partly resolved.
(iii) An expected load on IRIS
(iv) Till now less than 1 million returns filed for TY 2023 while about 4.8 million returns filed for TY 2022.
Kasbati, who is also ICAP Fiscal Laws Committee Member, elaborated that the Return Draft & final deadlines were missed by FBR & PRAL. He stated that the FBR/ PRAL was supposed to upload draft return form on IRIS by November 15, 2022 and final one to be notified by January 31, 2023 (and to the extent of Finance Act 2023 changes about TY 2023 by July 7, 2023). There was a delay in issuance of the final return form which was uploaded on IRIS by the PRAL.
Regarding several issues in return filing, he stated that through Pakistan Tax Bar Association (PTBA) letter of 2.9.23 highlighted Resolution/Correction of Technical/Practical Issues/Problems & IRIS predefined formulas in the Income Tax Return/ Wealth Statement Forms for Tax Year 2023.
While KTBA vide Letters raised several issues about IT returns.
Consequently, the Wealth Statement & section 7E issues have only been resolved on September 2, 2023. It was assured that the remaining issues would also be resolved. Whether the FBR/PRAL has done their homework earlier, he raised question.
Kasbati said that it is expected that at least 5 million returns will be filed for tax year (TY) 2023. So far, less than 1 million returns have been filed after resolution of the Wealth Statement issue and Section 7E issues. Therefore, 80 percent of the taxpayers are still not compliant for the tax year 2023.
He also predicted that keeping in view phase-wise extension like last year TY 2022 and several other issues, the FBR may extend the deadline till November 30, 2023. Initially, the FBR may grant general extension up to October 31, 2023.
In order to avoid any default surcharge, penalty & notices, Kasbati recommended taxpayers to submit Income Tax Return as soon as possible by September 30, 2023, keeping in view FBR’s SMSs with clear indication that no extension will be allowed. He further suggested that in the absence of an extension circular, it is recommended to submit an online extension application with proper reason keeping in view section 119 of the Income Tax Ordinance 2001.
Copyright Business Recorder, 2023