KTBA suggests changes to income tax return form

KARACHI: Karachi Tax Bar Association (KTBA) has sent suggestions and proposals for income tax returns 2014 that is uploaded on web portal of the Federal Board of Revenue (FBR).
The KTBA in a letter sent to FBR chairman on Monday said that after examination of the Returns, Annexures and Wealth Statement, following are the proposals and suggestions which may kindly be examined / considered to make the same more appropriately workable and practicable.
RETURN FORM (IT-1A) – FOR INDIVIDUAL, DERIVING INCOME UNDER THE HEAD SALARY & PROFIT ON DEBT SUBJECT TO FINAL TAX
a) Column for Date of Birth is missing. Although there is a check at Serial No. 15 which may be used by the e-filers whereas manual filers would not be able to incorporate the said date in the Return which is necessary to judge and examine the 50% reduction in tax to be claimed by the senior citizens. Therefore, it is suggested that the Column for Date of Birth may kindly be added in the Return available at the web Portal.
b) Similarly, Column for Gender Identification is also missing, which is also necessary as some of the names are commonly used for both the genders. Therefore, it is suggested that the Column for Gender Identification may kindly be added in the Return available at the web Portal.
c) Column for the Name of the Employer is also not there. Therefore, it is suggested that the Column for Name of the Employer may kindly be added in the Return available at the web Portal.
d) The Return Form, does not have the separate column for Exempt Income, which in our view is necessary so that the exempted income may also be declared by the taxpayer as such we suggest the column of exempt income needs to be added. This point is for all the Return Forms.
e) It is suggested that Columns A and B requiring total amount and the exempt amount be deleted and only the taxable amount shall be allowed to be declared by the taxpayers. As such at serial No. 2 of the Return which relates to Pay and Wages etc the words “as per salary certificate” may kindly be added.
f) Serial No 4 of the Return relates to Expenditure Reimbursement. Since under Section 12 same is not the income of the employee, therefore, in our opinion, this Serial No needs to be deleted.
g) Serial No 5 of the Return relates to the Value of Perquisites. Since the taxable perquisites are already included in the taxable salary and the prescribed certificate of taxable income issued by the employer and it is also included as per Serial No. 2 of the Return, therefore, in our view these words needs to be deleted. This serial No. also needs to be deleted.
h) As per Serial Nos. 18, 19, 33 and 34, it requires mentioning of Opening Date of the Bank Account. In our view, this will create unnecessary hardship for the taxpayers as the said information has no nexus with the requirement since Account Number and Bank description is already required to be furnished, which in our humble opinion is more than sufficient. Therefore, the column of Opening Date may kindly be deleted.
i) Serial No 35 relating to Credit of Tax Collected under Section 234. This Serial No. requires mentioning of the Registration Date of the motor vehicle. In our view this will also create unnecessary hardship for the taxpayers as the said information has no nexus with the requirement since the Registration Number of the motor vehicle is already required to be furnished, which in our view is more than sufficient. Therefore, the column of Registration Date may kindly be deleted.
j) Serial No. 34 and 35 requires mentioning of Maker of the motor vehicle. This in our view should be Make of the Motor Vehicle and not the Maker.
Serial No 36 relates to Credit of Tax Collected under section 236. The Serial No requires mentioning of the Connection Date. In our view this will create unnecessary hardship for the taxpayers as the said information has no nexus with the requirement since the Telephone / Cell Number is already required to be furnished, which in our humble opinion is more than sufficient. Therefore, the column of Connection Date may kindly be deleted.
k) Serial No 37 requires showing of CPR No. of the tax paid under Section 137(1). We are of the view that one more column should be provided for aforesaid purpose for the reason that in many cases the payment is made by more than one CPRs to meet the short payment, if any.
l) In the Verification Block, in our opinion, after the words “Return” the words appearing the statement under Section 115 (4) should be substituted by the words “Return / Profit on Debt Subject to Final Tax”, because of the reason that this Form of Return does not contain the particulars of whole of the statement u/s 115(4).
m) ANNEXURE F:
In our view this Annexure requires the information of expenditure borne / contributed by the taxpayer and contributions made by the family members. There is no cavil to furnish such information; however, we feel that format of earlier Annexure D for tax year 2013 contained quite exhaustive and sufficient information and it was more convenient and user friendly for the taxpayers. As such the Annexure F may be shaped in the format of earlier Annexure D with certain changes like removing the words optional for certain expenses. We also feel that in existing Annexure F, Serial No 18 to 21 are irrelevant as they are the part of Serial No 17. As such we suggest that Serial No 18 to 21 may be substituted by (a) to (d) of Serial No. 17.
I. RETURN FORM (IT-1B) – FOR INDIVIDUAL, DERIVING INCOME UNDER ANY HEAD OTHER THAN BUSINESS.
a) Column for Date of Birth is missing. Although there is a check at Serial No. 15 which may be used by the e-filers whereas manual filers would not be able to incorporate the said date in the Return which is necessary to judge and examine the 50% reduction in tax to be claimed by the senior citizens. Therefore, it is suggested that the Column for Date of Birth may kindly be added in the Return available at the web Portal.
b) Similarly, Column for Gender Identification is also missing, which is also necessary as some of the names are commonly used for both the genders. Therefore, it is suggested that the Column for Gender Identification may kindly be added in the Return available at the web Portal.
c) Column for the Name of the Employer is also not there. Therefore, it is suggested that the Column for Name of the Employer may kindly be added in the Return available at the web Portal.
d) The Return Form, does not have the separate column for Exempt Income, which in our view is necessary so that the exempted income may also be declared by the taxpayer as such we suggest the column of exempt income needs to be added. This point is for all the Return Forms.
e) It is suggested that Columns A and B requiring total amount and the exempt amount be deleted and only the taxable amount shall be allowed to be declared by the taxpayers. As such at serial No. 2 of the Return which relates to Pay and Wages etc the words “as per salary certificate” may kindly be added.
f) Serial No 4 of the Return relates to Expenditure Reimbursement. Since under Section 12 same is not the income of the employee, therefore, in our opinion, this Serial No needs to be deleted.
g) Serial No 5 of the Return relates to the Value of Perquisites. Since the taxable perquisites are already included in the taxable salary and the prescribed certificate of taxable income issued by the employer and it is also included as per Serial No. 2 of the Return, therefore, in our view these words needs to be deleted. This serial No. also needs to be deleted.
ANNEX-A:
a) As per Serial No. 31 it requires mentioning of Opening Date of the Bank Account. In our view, this will create unnecessary hardship for the taxpayers as the said information has no nexus with the requirement since Account Number and Bank description is already required to be furnished, which in our humble opinion is more than sufficient. Therefore, the column of Opening Date may kindly be deleted.
b) Serial No. 32 relates to Motor Vehicle Registration Fee u/s 231B which requires mentioning of Maker of the motor vehicle. This in our view should be Make of the Motor Vehicle and not the Maker.
c) Serial No. 33 relates to Motor Vehicle Token Tax u/s 234 which, likewise, requires to show Maker of the motor vehicle. This in our view should also be Make of the Motor Vehicle and not the Maker.
d) Serial No 34 relates to Credit of Tax Collected under section 235 which requires mentioning of the Connection Date. In our view this will create unnecessary hardship for the taxpayers as said information has no nexus with the requirement since the Consumer No. is already required to be furnished, which in our humble opinion is more than sufficient. Therefore, the column of Connection Date may kindly be deleted.
e) Serial No 35 relates to Credit of Tax Collected under section 236. The Serial No requires mentioning of the Connection Date. In our view this will create unnecessary hardship for the taxpayers as the said information has no nexus with the requirement since the Telephone / Cell Number is already required to be furnished, which in our humble opinion is more than sufficient. Therefore, the column of Connection Date may kindly be deleted.
f) Serial No 36 requires showing of CPR No. of the tax paid under Section 137(1). We are of the view that one more column should be provided for aforesaid purpose for the reason that in many cases the payment is made by more than one CPRs to meet the short payment, if any.
g) ANNEX-F:
In our view this Annexure requires the information of expenditure borne / contributed by the taxpayer and contributions made by the family members. There is no cavil to furnish such information; however, we feel that format of earlier Annexure D for tax year 2013 contained quite exhaustive and sufficient information and it was more convenient and user friendly for the taxpayers. As such the Annexure F may be shaped in the format of earlier Annexure D with certain changes like removing the words optional for certain expenses. We also feel that in existing Annexure F, Serial No 18 to 21 are irrelevant as they are the part of Serial No 17. As such we suggest that Serial No 18 to 21 may be substituted by (a) to (d) of Serial No. 17.
II. RETURN FORM (IT-1C) – FOR AOP DERIVING INCOME UNDER ANY HEAD OTHER THAN BUSINESS.
a) The Return Form, does not have the separate column for Exempt Income, which in our view is necessary so that the exempted income may also be declared by the taxpayer as such we suggest the column of exempt income needs to be added. This point is for all the Return Forms.
b) After Serial No 18, relating to Deductible allowances, after which there is no Serial row for Zakat Allowance under Section 60 which in our view is necessary. As such the row for Zakat allowance should be added accordingly.
c) Annexure F and Wealth Statement including Wealth Reconciliation is not at all legally required in the cases of AOPs. As such we are of the view that same may be excluded from the Form of Return.
ANNEX-A:
a) As per Serial No. 31 it requires mentioning of Opening Date of the Bank Account. In our view, this will create unnecessary hardship for the taxpayers as the said information has no nexus with the requirement since Account Number and Bank description is already required to be furnished, which in our humble opinion is more than sufficient. Therefore, the column of Opening Date may kindly be deleted.
b) Serial No. 32 relates to Motor Vehicle Registration Fee u/s 231B which requires mentioning of Maker of the motor vehicle. This in our view should be Make of the Motor Vehicle and not the Maker.
c) Serial No. 33 relates to Motor Vehicle Token Tax u/s 234 which, likewise, requires to show Maker of the motor vehicle. This in our view should also be Make of the Motor Vehicle and not the Maker.
d) Serial No 34 relates to Credit of Tax Collected under section 235 which requires mentioning of the Connection Date. In our view this will create unnecessary hardship for the taxpayers as said information has no nexus with the requirement since the Consumer No. is already required to be furnished, which in our humble opinion is more than sufficient. Therefore, the column of Connection Date may kindly be deleted.
e) Serial No 35 relates to Credit of Tax Collected under section 236. The Serial No requires mentioning of the Connection Date. In our view this will create unnecessary hardship for the taxpayers as the said information has no nexus with the requirement since the Telephone / Cell Number is already required to be furnished, which in our humble opinion is more than sufficient. Therefore, the column of Connection Date may kindly be deleted.
f) Serial No 36 requires showing of CPR No. of the tax paid under Section 137(1). We are of the view that one more column should be provided for aforesaid purpose for the reason that in many cases the payment is made by more than one CPRs to meet the short payment, if any.
g) ANNEX-F:
We are of the view that this Annexure relating to personal expenses is not required to be filed in the cases of AOPs. As such this Annexure F should be deleted from this Form of Return which is only for AOPs.
III. RETURN FORM (IT-2) – FOR INDIVIDUAL/AOP DERIVING INCOME UNDER THE HEAD BUSINESS & ANY OTHER HEAD
a) Column for Date of Birth is missing. Although there is a check at Serial No. 33 which may be used by the e-filers whereas manual filers would not be able to incorporate the said date in the Return which is necessary to judge and examine the 50% reduction in tax to be claimed by the senior citizens. Therefore, it is suggested that the Column for Date of Birth may kindly be added in the Return available at the web Portal.
b) Similarly, Column for Gender Identification is also missing, which is also necessary as some of the names are commonly used for both the genders. Therefore, it is suggested that the Column for Gender Identification may kindly be added in the Return available at the web Portal.
c) Column for the Name of the Employer is also not there. Therefore, it is suggested that the Column for Name of the Employer may kindly be added in the Return available at the web Portal.
d) The Return Form, does not have the separate column for Exempt Income, which in our view is necessary so that the exempted income may also be declared by the taxpayer as such we suggest the column of exempt income needs to be added. This point is for all the Return Forms.
e) It is suggested that Columns A and B requiring total amount and the exempt amount be deleted and only the taxable amount shall be allowed to be declared by the taxpayers. As such at serial No. 3 of the Return which relates to Pay and Wages etc the words “as per salary certificate” may kindly be added.
f) Serial No 5 of the Return relates to Expenditure Reimbursement. Since under Section 12 same is not the income of the employee, therefore, in our opinion, this Serial No needs to be deleted.
g) Serial No 6 of the Return relates to the Value of Perquisites. Since the taxable perquisites are already included in the taxable salary and the prescribed certificate of taxable income issued by the employer and it is also included as per Serial No. 3 of the Return, therefore, in our view these words needs to be deleted. This serial No. also needs to be deleted.
ANNEX-A:
a) As per Serial No. 31 it requires mentioning of Opening Date of the Bank Account. In our view, this will create unnecessary hardship for the taxpayers as the said information has no nexus with the requirement since Account Number and Bank description is already required to be furnished, which in our humble opinion is more than sufficient. Therefore, the column of Opening Date may kindly be deleted.
b) Serial No. 32 relates to Motor Vehicle Registration Fee u/s 231B which requires mentioning of Maker of the motor vehicle. This in our view should be Make of the Motor Vehicle and not the Maker.
c) Serial No. 33 relates to Motor Vehicle Token Tax u/s 234 which, likewise, requires to show Maker of the motor vehicle. This in our view should also be Make of the Motor Vehicle and not the Maker.
d) Serial No 34 relates to Credit of Tax Collected under section 235 which requires mentioning of the Connection Date. In our view this will create unnecessary hardship for the taxpayers as said information has no nexus with the requirement since the Consumer No. is already required to be furnished, which in our humble opinion is more than sufficient. Therefore, the column of Connection Date may kindly be deleted.
e) Serial No 35 relates to Credit of Tax Collected under section 236. The Serial No requires mentioning of the Connection Date. In our view this will create unnecessary hardship for the taxpayers as the said information has no nexus with the requirement since the Telephone / Cell Number is already required to be furnished, which in our humble opinion is more than sufficient. Therefore, the column of Connection Date may kindly be deleted.
f) Serial No 36 requires showing of CPR No. of the tax paid under Section 137(1). We are of the view that one more column should be provided for aforesaid purpose for the reason that in many cases the payment is made by more than one CPRs to meet the short payment, if any.
g) ANNEX-F:
In our view this Annexure requires the information of expenditure borne / contributed by the taxpayer and contributions made by the family members. There is no cavil to furnish such information; however, we feel that format of earlier Annexure D for tax year 2013 contained quite exhaustive and sufficient information and it was more convenient and user friendly for the taxpayers. As such the Annexure F may be shaped in the format of earlier Annexure D with certain changes like removing the words optional for certain expenses. We also feel that in existing Annexure F, Serial No 18 to 21 are irrelevant as they are the part of Serial No 17. As such we suggest that Serial No 18 to 21 may be substituted by (a) to (d) of Serial No. 17.
WEALTH STATEMENT:
a) Column No 3 which relates to Business Capital in respect of “Enter name, share percentage & Capital in each AOP capital”. We suggest that few additional rows may be provided for the reason that an Individual may be a member of more than one AOPs.
b) Column No. 4 relating to Non-Business Equipment etc. We feel that this part relates to the Agricultural Equipment and we feel that this part relates to the agricultural equipment. Our this view is substantiated by the first proposed Wealth Statement. Therefore, it is suggested that necessary changes may be made accordingly.
c) Column No. 6 and 7 relates to Non-Business Investment and Non-Business Debt. Our view is that this is cumbersome and is not practical / possible. As such it should be replaced as per the relevant Column of the Wealth Statement of Tax year 2013.
d) Column 8 requires to show Maker of the motor vehicle. This in our view should be Make of the Motor Vehicle not the Maker.
e) Column No 9 to 11 which relates to Precious Possession, House-hold effect and Personal Items. Our view is that this is very cumbersome and is not at all practical / possible. As such it should be replaced as per the relevant Column of the Wealth Statement of Tax year 2013.
f) Column 12 which relates to Cash-in-Hand/Cash-at-Bank (Non-Business). Our view is that this is also cumbersome and is not practical / possible. As such it should be replaced as per the relevant Column of Wealth Statement of Tax year 2013. Alternately, the word Form should be substituted by the words Particulars and the rest of the items be left blank to be filled in by the taxpayer according to his requirement. We are suggesting the above in view of the fact that you will appreciate that some of the items such as Fixed Deposits, Term Deposit etc are the items of Investment and not the items of Cash-in-Hand/Cash-at-Bank.
g) Column No 14 and 16 which relates to Assets and Liabilities in Others Name. In our view these words are not in accordance with the provisions of law which should be replaced by the words Assets in the name of spouse(s), minor children and other dependents which are the words in accordance with Section 116 (1) (b) of the Income Tax Ordinance 2001.
h) General observations: As suggested earlier, we again propose for the sake of convenience and facilitation of the compliant taxpayers, the Wealth Statement Form and Wealth Reconciliation prescribed for the Tax year 2012 should be adopted as it is for tax year 2014 also which in our view was quite sufficient and had adequate requirements as per the law.
There are certain formula mistakes and errors which are still being examined. As such at the present we are not commenting on the errors of formula. However the same may also be kindly examined at your end. Due to paucity of time the suggestions narrated in this letter may kindly be treated as preliminary objections and comments and may not be considered as our Bar’s final comments.

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