LAHORE: In letter written to FBR chairman the Pakistan Tax Bar Association (PTBA) has received many complaints / requests from the affiliated tax bars of the country that the income tax return for tax year 2020 needs some corrections pertaining to charging of minimum tax liability by the system because the system / IRIS e-portal is calculating/ charging minimum tax liability beyond the scope of existing provisions of law.
The Pakistan Tax Bar Association held a webinar to discuss the issues. A large number of members from all over the Pakistan joined the webinar and shared their views on the issues / practical problems being faced by tax advisors/ consultants while preparing income tax returns of the taxpayers.
During the discussion legal aspects of chargeability of minimum tax was also considered in the light of the intent of law maker as well as various circulars issued by the Board from time to time. There is no concept of apportionment of income or tax subject to minimum regime.
It would be important to note that Rule-13 is applicable for the purpose of section 67 of the Income Tax Ordinance, 2001.Section 67 has provided mechanism/ concept about apportionment of expenditures, deductions and allowances where there is:
- a) The derivation of more than one head of income; or b) Derivation of income comprising of taxable income and any class of income to which sub-sections (4) and (5) of section 4 apply, or
- c) The derivation of income chargeable to tax under a head of income and to some other purpose.
From bare reading of sub-sections (4) & (5) of section 4 to the Income Tax Ordinance, 2001 it clearly transpires that the same depicts the position about apportionment of income which are subject to final tax regime as the said apportioned income is not to be included in the computation of taxable income in accordance with section 8 or 169, as the case may be.
As against this, the system is though making apportionment of income attributable to minimum tax regime but is not excluding it from the other taxable income. Even on this basis the treatment adopted in the e-portal of IRIS by the system, is also not correct. Keeping into consideration all the legal aspects narrated above it has been resolved during the meeting on webinar by the PTBA that:
- The Board be approached for making necessary changes in the formulation/determination of minimum tax liability in the portal.
The last date for submission of return has been notified as 08.12.2020 determination of minimum tax liability, the tax payers would not be able to submit returns within due date, so action in this regard be taken at priority basis otherwise PTBA would have no other option but to ask for further extension for which the body of PTBA is not desirous and till the settlement of issue regarding. The scheme of the Income Tax Ordinance, 2001 is based on universal self-assessment scheme. Self -assessment does not mean only assessment of income, rather assessment of tax liability is also not only the prerogative and right but also obligation of the taxpayer.
It is requested that the relevant columns related to attributable taxable income against minimum tax liability which have been blocked in the portal be opened for the taxpayers to incorporate his/its own attributable income as the said option has been provided in the columns related to tax collections made u/s148 of the Income Tax Ordinance, 2001.Apart from the above calculation error in income tax return for tax year 2020, we would like to draw your attention towards another segment which is equally important for the taxpayers but the FBR is still has unable to publicize the prescribed FORM for updating the business profile by the taxpayers under section 114A of the Income Tax Ordinance 2001 .
It is important to point out here that PTBA had tried to highlight this issue through extension letter dated 26h September 2020 but unfortunately no action whatsoever has been taken by the FBR authorities in this regard. Whereas an amendment was made through Finance Act 2020 regarding up-dation of business profile by the taxpayers under section 114A of the Ordinance, 2001 but no specific prescribed FORM for the purpose is still introduced by the FBR. It is very unfortunate for the PTBA that why said prescribed FORM is still not publicized by the concerned FBR authorities1anbecause it is also a time consuming work for the taxpayers / tax consultants and last date for updating the same, is 31″ December 2020 asper provisions of law.
Needless to say that necessary changes/ corrections regarding calculation of minimum tax liability by the system / e portal of IRIS, are required immediately because it is the primary duty of the FBR to provide correct and complete return on e-port, so that the taxpayers can file their income tax returns for tax year 2020 whereas the genuine taxpayers are facing calculation issues pertaining to minimum tax liability.
Therefore, it is requested that necessary changes/ corrections regarding calculation of minimum tax liability by the system/ e-portal of IRIS, may be made / incorporated immediately as the taxpayers can file their income tax returns smoothly/ easily for tax year 2020 and necessary “FORM” for updation of business profile under section 114Aof the Income tax ordinance 2001, be issued / publicized / introduced.