'Loopholes in tax form to make returns difficult'

Experts say document includes certain parts pertaining to wealth reconciliation

ISLAMBAD: Tax lawyers and experts have pointed out several weaknesses in the draft of taxpayer forms released by the Federal Board of Revenue (FBR) and expressed their reservations that the loopholes would make it extremely difficult for individuals and Association of Persons (AOPs) to submit their FBR returns.

While calling for corrections, they claimed that the return forms included certain parts pertaining to wealth reconciliation due to which wealth statements already furnished and reviewed by FBR appear complicated.

The tax lawyers maintained that the form had been released after August 31, the final date for submission of wealth statements for salaried individuals under section 115 (4) of the Income Tax Ordinance 2001.

However, authorities at FBR observed that the tax collection agency would soon issue new, simplified forms for salaried individuals and AOPs, while a one-pager assessment form was also scheduled to be printed for small traders by September 30 after thorough consultation.

Responding to the question on weaknesses in the form, FBR officials maintained that the document was prematurely uploaded on the website and that all loopholes would be addressed soon.

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They said that draft form for income tax returns pertaining to companies had also been released, while industrial tax return form had not been issued for incorporated business enterprises.

An expert in tax affairs, advocate Faraz Fazal, while talking to The Express Tribune endorsed the weaknesses of the recently released FBR forms and noted that they contained a lot of flaws without addressing which, submission of returns would be difficult.

"The return form is not fully integrated with the FBR system and does not carry the previous data," Fazal said, and added that "the form had been revised in the light of tax rates and rules amended in Finance Act 2018, while FBR officials did not reflect the changes made during an entire year".

He noted, "The return form should have been released in July or August after implementing the budget last year so that its weaknesses could be addressed and removed by all concerned stakeholders," and observed that "As per ITO section 114 and in compliance of section 115 (4) of the same, salaried individuals must submit their assessments by August 31".

Fazal claimed that the forms were issued after the date had lapsed and were full of complications.

He pointed out that the components of wealth statement and wealth reconciliation statement in the document would lead to problems for both the filer and FBR.

It would mean that the wealth and reconciliation statements already reviewed by FBR would make current submissions extremely difficult.

Any taxpayer wanting revisions would have no option at his disposal, while tax rules permit individuals to make amendments in their yearly wealth statements.

The new form also does not integrate the old data pertaining to reconciliation and wealth statements, which makes it questionable as to how the filers would submit their current income tax returns. As such, FBR must extend the date for submission of returns as it did last year.

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As per rules, salaried persons and contract employees must submit their return by August 31. Likewise, other individuals and association of persons may submit their returns by September 30, while companies can submit their returns by December 31. However, due to delays in finalisation of the return forms, these dates are being extended.

According to FBR officials, the current form is introduced for salaried persons and AOPs while the form for companies is awaiting release.

The FBR maintained that any weakness spotted in the form would be removed soon and that a simple one page form would be released for the salaried class.

The form for small traders would be released after September 30 following the ongoing deliberations on the fixed tax scheme.

"The current form for individuals is released in the light of legal requirements as was laid in Finance Act 2018, which is why it appears complicated and unreasonably detailed," an FBR official said.