ISLAMABAD: A Think Tank - Prime Institute on Wednesday disclosed that taxpayers who have been manually filing the tax returns primarily due to lack of digital literacy or access of technology, are facing administrative issues.
According to a paper of the said think tank, the government must ensure that all valid manual filings have been recognised. The Federal Board of Revenue (FBR) has denied the “Active Taxpayer” status of the manual income tax filers for the tax year 2024, despite the existence of FBR’s circular no.6 2025-26, that specifically recognises the legal status of manual return filers.
Although these taxpayers submitted their returns within the extended deadline of 30th November 2025, the FBR field offices have blocked their active status, completely ignoring the directives of Federal Tax Ombudsman’s (FTO) and FBR’s own circular.
In an attempt to automate the procedure and contribute towards digitalisation of the economy, the FBR signed an agreement with Karandaaz for the digitisation of tax system. Under this agreement, several initiatives were introduced to improve tax compliance in the country. Among these initiatives, the FBR launched IRIS 3.0. Pakistan Digital tax system, aimed at simplifying the tax filing process through automation, real time data integration and artificial intelligence.
The system was introduced to enhance efficiency, improve compliance and reduce discretionary powers exercised by FBR’s field offices. While digitalisation of tax filing system was intended to streamline process and restrict the discretion of refusal, the transition has exposed the structural gaps in the system.
Taxpayers who have been manually filing the tax primarily due to lack of digital literacy or access of technology are facing administrative issues.
The government attempted to address this gap through circular no. 6, which not only extended the deadline but also gave directives for free legal and technical assistance to facilitate manual tax filers, however it was not been implemented.
The failure to implement its own circular points towards institutional inertia and field offices unchecked discretionary actions. While the digital system was meant to improve the efficiency and transparency, it has left manual taxpayers marginalised.
By doing so, the institution has not only disregarded the directives of FTO but also highlighted a system that penalise the lawful compliance rather than facilitating it. This approach discourages the voluntarily compliance and erode their trust in the institution.
The government must ensure that all valid manual fillings have been recognised, the paper said. The existing tax facilitation desk at field tax offices are onboarding the manual taxpayers without any discretionary penalties, supported by the efficient assistance mechanism, real time verification systems and measures to reduce the institutional discrepancies. These measures ensure that digital tax system isn’t integrated at the expense of manual taxpayers, it added.
Copyright Business Recorder, 2026
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