Tax Bar Associations (TBA), chartered accounting firms, tax advisers and tax experts approached the Federal Board of Revenue to extend the deadline for filing income tax returns to October 31, 2023 due to technical and statutory issues.
The FBR sent a system-generated SMS to all taxpayers last week on September 24, “Dear taxpayer. Please file your income tax returns for FY-2023 as soonest.” The deadline to file your return is September 30, 2023. This date will not be extended.
The Karachi Tax Bar Association informed the FBR of a new IRIS IT glitch that prevents them from responding to notices.
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The new glitch is a recent occurrence and relates to the inability for the taxpayer to respond. After the Commissioner of Inland Revenue – Appeals (CIR A) modifies the orders of appeal orders. You will be aware that after the CIR-A modifies a assessment order, an IRO sends a notice for further proceedings to the taxpayer. However, there is no option for the taxpayer to respond to this notice within IRIS 2.0.
It was currently experiencing technical problems. He highlighted specific instances where some files open in the old format while others display the new format. He also noted that the data import for income Tax returns Year 2022 portal from previous returns does not work as intended. There are issues with adjusting refunds.
The Karachi Tax Bar Association also informed the FBR Chairman that data from last year’s wealth declaration was missing/removed/missing from this year’s statement.
This abrupt change is creating unprecedented hardships and causing inconveniences for taxpayers. Information Technology (IT), we have believed, should be used to ease the burden of the taxpayers. The current state of IRIS2.0 appears to be doing exactly the opposite, causing frustration,” said the association.
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Asif S. Kasbati, Pakistan Business Counsel Core Tax Committee member, explained that, as per section 118 (a) Individuals & Associations of Persons with the year between July 1, 2022. June 30, 2023, and (b), Companies having a year-end from January 1, 2022 until December 31, 2022 must file their tax year (TY 2023) return by September 30, 2023.
Due to the fact that September 30, 2023 falls on a Saturday and is a public holiday in the United States, the deadline would fall on Monday, October 2, 2023, according to the General Clauses Act.
Kasbati expected an extension of the date for filing returns up to October 31st, 2023. This was due to four major reasons:
- FBR & PRAL missed the deadlines for Return Draft & Final Deadlines;
- The Return of Several Issues and their partial resolution
- IRIS Expected Load
- Quantity matters. Less than one million returns were filed for TY2023 and about 4.8 millions for TY2022.
Kasbati, ICAP Fiscal Laws Committee member elaborated on the fact that FBR & PRAL missed both the final & return draft deadlines. He said that FBR/PRAL were supposed to upload the draft return form to IRIS by November 15, 2020 and notify the final by January 31, 2023. (And to the extent Finance Act 2023 changed about TY-2023 by July 7,2023).
The PRAL uploaded the return forms on IRIS after the PRAL issued the draft form. Final return form on June 19, 2023 and June 27, 2103 respectively.
Regarding several issues in return and partly resolved, he stated that through PTBA Letter of 2.9.23 highlighted Resolution/Correction of Technical. Practical Issues/Problems & IRIS predefined formulas in the Income Tax Returns / Wealth Statement Forms for Tax Year 2023.
In their letters, KTBA raised a number of issues relating to IT returns. The Wealth Statement and Section 7E questions were resolved only on September 2, 2023. PTBA etc. were assured that the remaining issues will be addressed.
The law states that these issues would not have occurred if the FBR/PRAL had completed their preparations three months before.
Kasbati also reminded that “the annual sales tax returns deadline is also on the 30.9.23. Which will increase work from 27.9.23 until 30.9.23.” IRIS did not work (like 15.8.23), or was slow on a specific day. It is expected to be very slow from 27.9.23-30.9.23, as Taxpayers have this problem almost every year.
For TY 2023, it is anticipated that at least 5 million tax returns will be submitted.
Kasbati & Co., a tax consultant based in Karachi, estimates that less than one million tax return have been filed to date. This is due mainly to the recent resolutions of the Wealth Statement and Section 7E questions, which only occurred on September 2, 2023. The FBR does not want to see 80% of taxpayers being classified as non-compliant.
He predicted that “Phase -wise Extension, like last year’s TY 2022, and several issues, as mentioned above. Can be safely predicted that the FBR extend the deadlines until November 30, 2023. However, as a preliminary step, the FBR will grant a general extension up to October 31, 2023.”
Kasabti advises that you submit your Income Tax return as soon as possible before September 30, 2023 to avoid any default surcharges, penalties, or notices. This advice is consistent with FBR SMS notifications sent to taxpayers which state clearly that no extensions will be granted.
According to the FBR Circular, FBR Offices and Departments are open until 8 pm on Saturday, September 30, 2023.
He suggested as a taxpayer who is compliant that, in the absence a circular extending the deadline. It would be best to submit a request for an online extension with citations in accordance with section 119 Income Tax Ordinance of 2001.