Given the current scenario brought on by the floods and the technical challenges with the online return form, the Federal Board of Revenue (FBR) is likely to extend the deadline for filing income tax returns for the tax year 2022.
September 30, 2022, is the deadline for submitting an income tax return for the 2022 fiscal year. The FBR has previously stated that it will not extend the deadline and has asked taxpayers to comply by the deadline.
Despite the fact that no decision had yet been made in this regard, sources within the FBR said as much. The revenue body was, however, giving the date extension requested by the business community considerable consideration.
The FBR has been contacted by chambers and associations to extend the September 30, 2022, deadline for filing income tax returns.
In a letter to the Finance Minister, Karachi Chamber of Commerce and Industry (KCCI) President Muhammad Idrees asked that the FBR extend the deadline for filing income tax returns from September 30, 2022, to December 31, 2022, in light of the unusual situation that has emerged across the nation as a result of recent rainfall and flash floods.
He claimed that people from various walks of life and members of the commercial and industrial community frequently approached the chamber to request that the deadline be extended until December 31, 2022.
The taxpayers, in particular the members of the business & industrial community, are facing a lot of problems as a large portion of receivables from various parts of the country badly hit by floods are still pending, he said. “Due to imposition of ban on imports which was followed by an unusual situation all over the country emerging after torrential rainfalls and flashfloods,” he said.
The fact that all economic, commercial, agricultural, and other operations have completely ceased in the flood-affected areas has led to major cash flow concerns, and it will take at least another two months for things to get back to normal, was well known.
Given this situation, it has become necessary to give relief to devoted taxpayers in the form of an extension of the deadline; therefore, he asked the Finance Minister to direct FBR to extend the deadline for filing income returns to December 31, 2022, which will be warmly received by devoted taxpayers across the nation.
Additionally, the portal for filing returns has some bugs that tax professionals claim have not yet been fixed.
Recently, the Karachi Tax Bar Association (KTBA) called attention to issues with the online return form. It stated that because the Income Tax Return Form does not have a column for the adjustment of bringing forward capital losses under the head of capital gains, the tax on capital gains cannot be calculated properly.
The Tax Credits Annexure of income tax returns for salaried individuals accidentally includes the Column of Tax Credit for Specified Industrial Undertakings u/s 65G of the Income Tax Ordinance, 2001, even though there is no relationship between the two.
Although the rate of tax on contract receipts under section 153 was lowered from 7.5% to 7.0% for Tax Year 2022, the return for TY 2022 that is published on IRIS does not include a column reflecting the lower rate.
The final SRO 1733(1)/2022 was released on September 13, 2022, however, the draft manual return forms for individuals and AOPs for the tax year 2022 were released belatedly on August 26, 2022. As a result, just 17 days—insufficient under the law—have been given to file the manual returns.
It must be fixed as quickly as possible because the IRIS portal is computing the gain on the sale of immovable properties incorrectly in contravention of section 37(1A) of the Income Tax Ordinance, 2001.
According to clause (6) of Part-III, 2nd Schedule of the Income Tax Ordinance, 2001, which states that tax shall not exceed 10% of such Profit/Yield, the IRIS site calculates incorrect tax on profit/yield on Bahbood Certificates, Pensioner’s Benefits Accounts, and Shuhada Family Welfare Accounts.
A taxpayer is unable to file the Foreign Income & Assets Statement required by section 116A(1) of the Ordinance because there is no option list in the drop-down lists for country and currency under Code “7006” with the description “Investment (Non-Business) (Account / Annuity / Bond / Certificate / Debenture / Deposit / Fund / Instrument / Policy / Share / Stock / Unit, etc.)”.
“Reconciliation of Net Assets” displays opening wealth. Even though the taxpayer’s residency status is designated as “non-resident” for Tax Year 2022, he shouldn’t be needed to file the wealth statement with the reconciliation of net assets because the value of opening net assets is displayed under code “703002.”
The Income Tax Return Form of “Income for a person deriving income only from salary and other sources” shows the withholding rates on payment of Dividend @ 7.5%, 15%, and 25% (under section 150 of the Ordinance), however, it does not include the Column Code 64330052 (Dividend u/s 150 @25%).
By the Finance Act of 2020, a proviso was added to section 22(2) of the Tax Ordinance, reducing depreciation on additions to fixed assets made after July 1, 2020, by 50%. However, the IRIS calculates depreciation at 50% on total values when entries linked to written-down values are placed in the depreciation schedule as opening values.