FBR cannot hide behind software limitations: federal tax ombudsman
KARACHI: The Federal Tax Ombudsman (FTO) has held that the Federal Board of Revenue (FBR) cannot hide behind the ‘technical limitations’ of its own IRIS software to deprive a taxpayer of a substantive legal right and has directed the board to remove system...
The Federal Tax Ombudsman has ruled that the Federal Board of Revenue cannot rely on shortcomings in its own IRIS filing system to deny a taxpayer a legal right to tax relief, according to a report published by Dawn Business.
The case involved a salaried taxpayer who also serves as a director in a private limited company and, through counsel Muhammad Aleem, complained that the system would not allow him to claim a tax credit available under Section 63 of the Income Tax Ordinance 2001. The complainant said he had invested in an Approved Pension Fund and was therefore entitled to a tax credit of Rs2,341,120.
According to the feed report, the problem arose when the taxpayer filed his return for tax year 2025. He said IRIS would not calculate the credit correctly, forcing him to deposit Rs217,188 to file on time and avoid penalties. The complaint also referred to a surcharge of Rs1,066,257 paid under Section 4AB, which the taxpayer argued should have been included in the calculation of the credit. The counsel said IRIS failed to pick up the surcharge automatically when computing tax under Section 63.
The complaint was later taken to the Commissioner Inland Revenue, who approved a revised return under Section 114(6)(ba) of the ordinance so the tax credit could be incorporated. But even after that approval, the software still did not allow the revision, with the department blaming glitches in the FBR’s filing system.
The report said the taxpayer then approached the FBR chairman, the Member (Operations) and the helpline, but did not receive a response. After examining the matter, the FTO found no dispute over the taxpayer’s entitlement to the credit or over the validity of the approval for revision. It held that the tax administration could not use technical limitations in its software to block a substantive right granted by law.
The ombudsman also said the FBR was obliged to provide a working interface where the law permits a credit and the commissioner has authorised a revision. The silence of FBR headquarters, together with IRIS’s failure to implement the order, was treated as a systemic failure. The FTO described the matter as maladministration under the relevant ordinance, citing delay, inefficiency and inattention in tax administration.
The report said the FTO directed the FBR’s Director General (IT & DT) to work with M/s PRAL to remove the system glitches immediately and allow the taxpayer to revise his return for tax year 2025 with the admissible credit. It added that, in compliance with the recommendation, the IRIS glitches were removed and the revised return was filed with the lawful tax credit allowed.
This report is based on a monitored public feed and is attributed to Dawn Business.
Source: Dawn Business - https://www.dawn.com/news/2017155/fbr-cannot-hide-behind-software-limitations-federal-tax-ombudsman
