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Urgent Action Needed:
KTBA
Exposes Crucial Errors in 2023 Income Tax Return Forms
The Karachi Tax Bar Association
(KTBA) has raised concerns about significant errors and oversights in the
income tax return forms for the tax year 2023. These issues are creating
difficulties for taxpayers in meeting their tax obligations on time. To address
the problems urgently, the KTBA has formally written to the high-ranking
officials of the Federal Board of Revenue (FBR).
In the letter, KTBA President
Syed Zafar Ahmed pointed out various flaws in the return forms, expressing
serious worries about the negative impact these errors are having on timely tax
compliance. Taxpayers and their consultants are facing adverse consequences as
they waste valuable time trying to navigate through these problems.
The main technical glitches and errors highlighted by the KTBA include:
1. Lack of Highlighted Changes in
the Return: The Draft Return for Tax Year 2023 was issued with only a brief
7-day consultation period during the Eid-ul-Adha holidays. As a result,
stakeholders find it challenging to identify irregularities, and changes made
in the return form have not been adequately highlighted. This makes it difficult
to track and compare current and previous year returns.
2. Missing Column for Adjustment
of Brought Forward Capital Losses: The absence of a column for adjusting
brought forward capital losses under the head of capital gains is leading to
inaccurate tax calculations for capital gains.
3. Incorrect Tax Calculation on
Profit on Debt: The IRIS portal is incorrectly calculating tax on profit/yield
on certain financial instruments, which goes against the relevant clauses of
the Income Tax Ordinance, 2001.
4. Erroneous Calculation of
Depreciation: Despite the omission of the Proviso to sub-section 2 of section
22 of the Income Tax Ordinance, 2001 through the Finance Act, 2022, the Return
of Income still restricts depreciation to 50%.
To tackle these issues, the KTBA has put forward essential amendments, including:
1. Adjustment in Wealth
Reconciliation Statement: To prevent unnecessary show cause notices, the Wealth
Reconciliation Statement should allow explanations and additional line items
for adjustments.
2. Primary Information of Bank
Account on the Face of Wealth Statement: To avoid confusion and unwarranted
show cause notices, mandatory information such as Bank Account Numbers should
be included in the Wealth Statement.
3. Primary Information of Tax
Deduction at Source Not Appearing on the Face of the Return: Similar to the
Wealth Statement, the return should display essential information regarding tax
deducted or collected at source to prevent confusion and show cause notices.
4. Auto Generated PSID for
Capital Value Tax on Foreign Assets: An option for the automatic generation of
PSID for the payment of Capital Value Tax on Foreign Assets should be made
available on the IRIS platform.
5. Auto Import of Wealth Reconciliation
Statement: To streamline the filing process, the Wealth Reconciliation
Statements from the previous year's return should be automatically imported.
6. Inclusion of Attributes in
Printed PDF: To avoid omissions and discrepancies, the printed version of the
PDF should contain all sections and attributes.
The KTBA urges the FBR to
promptly address these issues, ensuring that taxpayers can file their returns
and wealth statements without any hindrance. They emphasize that taxpayers
should be given adequate legal time for compliance after resolving these
anomalies, and the return forms should be reissued with all necessary
corrections.
