The Karachi Tax Bar Association (KTBA) has once again raised alarms over serious flaws in the Federal Board of Revenue’s (FBR) online return filing system “IRIS,” pointing out errors in the new income tax return form and misapplication of tax provisions for Tax Year 2025.
In a detailed letter to the FBR Chairman, the KTBA highlighted persistent technical glitches and incorrect tax treatments that are obstructing smooth filing of returns. Despite repeated communications, the association noted that the issues remain unresolved, raising concerns about FBR’s lack of response.
The KTBA observed that IRIS fails to compute tax credit on donations under Section 60 of the Income Tax Ordinance against the surcharge imposed under Section 4AB. It stressed that surcharge falls within the legal definition of “tax” and should therefore be considered when calculating donation-related credits. Ignoring this, the KTBA warned, deprives taxpayers of their rightful relief.
Another flaw flagged is the system’s refusal to adjust surcharge under Section 4AB against advance tax already paid or withheld, instead requiring a separate payment challan (PSID). The KTBA termed this treatment unlawful, cautioning that it could amount to double taxation.
The association strongly opposed treating additional withholding under Section 100BA and the Tenth Schedule as “minimum tax.” It argued that income tax is assessed annually, and excess withholding should not be carried forward as a minimum liability. Such practices, KTBA warned, discourage voluntary compliance and erode trust in the tax regime.
The KTBA also highlighted errors in applying Section 235, which outlines two distinct treatments for tax deducted via electricity bills. While small consumers’ payments (up to Rs. 360,000 annually) are treated as final tax, larger payments must be adjustable against overall liability. IRIS, however, treats all such collections as final tax, which the KTBA says unlawfully denies taxpayers their right to adjustment.
The association urged the FBR to immediately correct these anomalies in the IRIS system or issue clear notifications to remove ambiguity. It warned that failure to address these concerns will only fuel unnecessary disputes and further weaken compliance.
