KTBA expresses concern over complicated Income Tax Return form, point out flaws

SUPPORTS GOVERNMENT MEASURES TO INCREASE TAX BASE

KARACHI: Karachi Tax Bar Association (KTBA) has expressed serious concern over manner in which its members were asked to fill and file Income Tax Return forms which they say is a complex documents spreading over 56 pages and needs ample time to complete it along with annexures.

KTBA shared a letter it has written to Chairman FBR in which it said that “it was duly highlighted in our above referred correspondence that the return forms were neither issued in offline/demo mode, with the formulas, nor in the Excel format, at the least, so as to enable the user to have any clue as to what changes have actually been made. This, you would appreciate can only be done by feeding the data in the forms so as to evaluate whether the form is correctly performing the computation/working out the income and the tax liability.

Up till now since the issuance of the forms, more than seventeen (17) days have been passed on and it is now not a much unknown fact that return forms are filled with glitches and lacunas, which are factually deterring any bonafide filing of a tax return by an individual, whether Salaried or Business; resident or a non-resident. Needless to mention that Individuals constitute the largest class of tax filers out of 2.5 Million club of taxpayers, the letter to chairman FBR said.

KTBA also pointed out flaws in the process  which are narrated here under for your necessary attention as filing of tax returns has been seriously jeopardized by these anomalies: i. Statement of Final Taxation for Individuals, Salaried Individuals and AOPs is not accompanied with Wealth Statement, which is a separate requirement under Section 116 of the Income Tax Ordinance, 2001; ii. Non-residents are not required to file Wealth Statement. On the other hand, the IRIS is invalidating their filing at the portal without a Wealth Statement; iii. The IRIS is also asking for details of Personal Expenses in cases of Non-resident, without which the return cannot be submitted. iv. Tax Return of a Salaried Individual contains only Reconciliation of Wealth without any details of assets/Wealth Statement which is not in accordance with Section 116 of the Ordinance; v. In the Wealth Reconciliation which is accompanied with the Tax return, the detail from the last year Amnesty is being included in the inflows of the total. All those who filed Asset Declaration last year are now unable to file return as of now. vi. Person who is required to file statement under Section 115 (4) of the Ordinance has no option left to file Wealth Statement as no separate tab is appearing in IRIS module. vii. There is a single field/column for foreign income only contrary to the requirements of section 103 (8) read with section 104 of the Ordinance that provides computation of foreign income/loss and adjustment and carry forward of losses; viii. There is no option to declare foreign income with their respective heads of income and instead only figure sums it all which does not give the fair picture of the foreign income; ix. Tax on income from Bahbood Certificates/ Pensioners Benefit account is not being properly worked out. x. There is no provision for adjustment or claim of capital loss in return form after NCCPL issues the annual certificate 7. Besides the above lacunas, what needs emphasis here is that legal and permissible time period for filing a return is 90 days under section 118 of the Ordinance, while on the contrary, only 27 days have been given here between September 2 nd and September 30th, 2019; 8. What further has added to the agony of the taxpayers is the obnoxious condition imposed on them September 05th, 2019 vide C.No.2(I)Cond./I.Tax/2018 dated September 05th, 2019 whereby the instruction was given to the Commissioners to ensure the payment of due tax before allowing any extension. It means the taxpayer has to pay for the income tax first if one has to apply for extension, beyond the dead line of September 30th , 2019 which he should not be needed to beg for in the first place. It is not only a disgrace to a bonafide taxpayer to succumb to an unwarranted condition of tax payment but also tantamounts to make him suffer through the encroachment in his legal space under the Ordinance, which allows him necessary time period to file his return of income with respect and without getting his legal right vitiated. It need not to be emphasized that the Commissioner is otherwise independently empowered to grant extension to a taxpayer in terms of section 119 (3) of the Ordinance if such a request is made to him without regard to any instructions from the Board. 10. At the same time, we as a Bar, are cognizant of the fact the FBR’s campaign to increase the number of returns/ compliant taxpayers should not be sabotaged merely on the ground of short time period given firstly to understand the forms and again to file the returns of income. It is, therefore, all befitting that the due number of days, which are ninety (90) from the issuance date of the final return forms are allowed to the taxpayers and is not compromised on any pretext, KTBA maintained in the letter.

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