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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 glitches that were blocking a lawful tax credit under Section 63 of the Income Tax Ordinance 2001.
The ruling came in a complaint filed by a salaried individual serving as a director in a private limited company through his counsel Muhammad Aleem. The complainant, a regular and compliant taxpayer, had made an investment in an Approved Pension Fund entitling him to a tax credit of Rs2,341,120 under Section 63 of the ordinance.
“However, due to system-related constraints on the IRIS portal, the correct credit could not be claimed at the time of filing the return for tax year 2025, compelling the complainant to deposit Rs217,188 merely to ensure timely filing of return and avoid penal consequences,” said the complainant’s counsel Muhammad Aleem citing the background of the issue.
“The amount of surcharge of Rs1,066,257 under Section 4AB of the ordinance at the rate of 10 per cent was paid in addition to the income tax imposed under Division-I of Part-I of the First Schedule and was not included by IRIS for calculating the correct tax credit under Section 63 where the taxable income exceeds Rs10 million. Surcharge under Section 4AB is a defined tax under Section 2(63) which was not picked up by IRIS automatically for correct calculation of tax under Section 63 in the case of this taxpayer.”
