ISLAMABAD: Mounting frustration over persistent glitches in the Federal Board of Revenue’s (FBR) online portal has prompted the Lahore Tax Bar Association (LTBA) to seek direct intervention from Prime Minister Muhammad Shehbaz Sharif, urging him to extend the income tax return filing deadline for Tax Year 2025 until November 30.
In a strongly worded letter issued on Tuesday, LTBA President Muhammad Asif Rana said that despite an earlier extension announced through Circular No. 05 of October 15, 2025, serious technical and procedural flaws in the IRIS system continue to obstruct taxpayers’ ability to file returns accurately and on time. The letter described the situation as “a systemic failure that has paralyzed compliance.”
Key Issues Raised by LTBA
1. Erroneous Application of Tax Credits and Section 4AB:
The LTBA stated that the IRIS system is wrongly applying tax on exempt income from Associations of Persons (AOPs), contrary to Section 92 of the Income Tax Ordinance, 2001. Additionally, it has been imposing the 10% super tax under Section 4AB on exempt income, resulting in thousands of incorrect tax demands.
2. Faulty Apportionment in Minimum Tax Regime:
The association highlighted that the system is apportioning tax in cases where the minimum tax regime applies — an error that should only occur in the final tax regime — causing inflated tax liabilities.
3. Misapplication of Tax on Profit on Debt (Section 151):
According to the LTBA, the portal is incorrectly applying Section 151 instead of Section 7B, leading to excessive taxation on profit on debt and violating multiple sections of the Ordinance, including 7B, 8, 168, and 169(2)(e).
4. Failure to Notify Manual Return Form:
Under Rule 73(2DD) of the Income Tax Rules, 2002, FBR is required to issue a manual return form. However, for Tax Year 2025, this has not been notified, leaving many taxpayers—especially those in remote areas—unable to file returns.
Delay in Notifications and Reduced Statutory Filing Period
The LTBA also criticized the FBR for delaying the release of the final return form. Legally due by December 1, 2024, it was published only on July 7, 2025 — 219 days late — and formally notified on August 18, 2025, after another 199-day delay. The association noted that this effectively shortened the 92-day statutory filing window by nearly half, justifying an additional extension until November 30.
Mounting Compliance and Legal Risks
Rana warned that unresolved system flaws and erroneous tax computations could trigger widespread litigation, further burdening the courts and disrupting revenue collection. He urged the government to take immediate corrective measures to preserve taxpayer confidence and uphold the credibility of the tax system.
“Given the persistent technical obstacles, legal ambiguities, and shortened statutory period, extending the deadline till November 30, 2025, is both fair and necessary,” the LTBA concluded.
As the October 31 deadline nears, pressure is growing on the FBR and the government to provide relief — with thousands of taxpayers anxiously awaiting the Prime Minister’s response.
