Due to technical and legal concerns, tax bar associations, chartered accounting firms, tax counselors, and tax specialists have petitioned the Federal Board of Revenue (FBR) to extend the deadline for filing income tax returns until October 31, 2023.
Asif S Kasbati, a famous Karachi-based tax expert, explained the reasons for the probable extension in the deadline for filing income tax returns to a local newspaper agency.
FBR Public Message Regarding Tax Filing
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.
According to the Karachi Tax Bar Association, the new IT fault in the IRIS is the inability to react to alerts.
This new flaw in the system has recently emerged and is related to the taxpayer’s incapacity to reply to letters issued by IR Officers (IROs) following the modification of orders in appeal orders by the Commissioner Inland Revenue-Appeals (CIR-A).
Following the modification of an assessment order by a CIR-A, the concerned IRO provides a notice to the taxpayer for further proceedings, for which there is presently no opportunity within the IRIS 2.0 to submit his reply or rebuttal.
Karachi Tax Bar Association and FBR Chairman
The Karachi Tax Bar Association also told the FBR Chairman that data from the prior year’s wealth declaration is suddenly missing/ removed from the current year’s statement.
This rapid change has caused unprecedented pain and annoyance for taxpayers.
We have long believed that information technology (IT) should be used to reduce taxpayer burdens.
Unfortunately, the current status of IRIS 2.0 looks to be creating irritation.
FBR Section 118
When contacted, Asif S Kasbati, Pakistan Business Counsel Core Tax Committee Member, explained that section 118 states that:
(a) individuals & Associations of Persons having year from July 1, 2022 to June 30, 2023
(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, because September 30, 2023 falls on a Saturday and is a public holiday, the due date would be Monday (October 2, 2023), in accordance with the General Clauses Act.
Kasbati anticipated a return filing date extension till October 31, 2023 for four primary 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 a member of the ICAP Fiscal Laws Committee, explained that the FBR and PRAL missed the Return Draft and final dates.
IRIS Issue and Delay From PRAL
He added that the FBR/PRAL was scheduled to upload a draft return form to IRIS by November 15, 2022, and the final one was supposed to be notified by January 31, 2023 (and, to the extent that Finance Act 2023 changes about TY 2023, by July 7, 2023).
The PRAL delayed the issuance of the final return form, which was uploaded to IRIS.
To avoid any default charges, penalty, or notices, Kasbati advised people to file their income tax returns as soon as possible by September 30, 2023, keeping in mind the FBR’s SMSs that clearly stated that no extensions would be granted.
In the absence of an extension circular, he suggests submitting an online extension application with adequate justification in accordance with Section 119 of the Income Tax Ordinance 2001.
To read our blog on “FBR stop using digital balloting for selection of audit case,” click here.