FBR cannot use technical limitations of IRIS software as excuse: FTO
KARACHI: Federal Tax Ombudsman (FTO) has ruled that the Federal Board of Revenue (FBR) cannot use technical limitations of its IRIS software to deny taxpayers their legal rights, directing the Board to fix system glitches that blocked lawful tax credit.
According to the details, the FTO said the FBR’s failure to implement a Commissioner-approved revision on the IRIS portal amounted to maladministration, and ordered immediate corrective measures through PRAL.
The case was filed by a salaried individual and director of a private limited company.
The complainant, a regular taxpayer, had invested in an Approved Pension Fund, making him eligible for a tax credit under section 63 of the Income Tax Ordinance, 2001.
However, due to system constraints on the IRIS portal during filing for Tax Year 2025, the credit could not be claimed. To avoid penalties, the taxpayer deposited Rs. 217,188.
The issue was compounded by IRIS not including a surcharge of Rs. 1,066,257 levied under section 4AB of the Ordinance for taxable incomes exceeding Rs. 10 million.
The section 4AB tax is defined under section 2(63) and should have been factored into the section 63 credit calculation, but IRIS did not pick it up automatically.
With approval from the Commissioner Inland Revenue under section 114(6)(ba) to file a revised return, the taxpayer attempted to incorporate the credit. Despite the legal approval, IRIS still refused to allow it.
The FTO found no dispute over the taxpayer’s entitlement or the validity of the revision approval. The department cannot use the technical limitations of its own software as a shield to deny a taxpayer a substantive legal right, the FTO observed, adding that the FBR is duty-bound to provide a functional interface wherever the law allows a credit and the Commissioner authorizes a revision.
The FTO said that forcing a taxpayer into litigation or penalizing him because the computer system was not updated in line with the law reflects inattention, delay and inefficiency and added that the inability of IRIS to implement the Commissioner’s order, coupled with silence from FBR Headquarters, constituted maladministration under section 2(3)(ii) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000.
The FTO further directed the Director General IT and DT, FBR to take up the matter with PRAL for immediate redressal by removing the system glitches and enabling the complainant to revise his return for Tax Year 2025 with the admissible section 63 credit.
Copyright Business Recorder, 2026