Taxpayers and tax practitioners have raised 17 issues with Pakistan’s digital income tax filing system, prompting Pakistan Revenue Automation Limited to resolve several problems while referring reforms for consideration in Tax Year 2027.
The issues were discussed during a meeting between the Karachi Tax Bar Association and PRAL. The discussions covered income tax returns, wealth statements, refunds, previous year data, property declarations, business capital, advance tax adjustments and automatically populated withholding tax information.
One of the major concerns involved tax refunds. The KTBA said the current return form does not consistently allow available refunds to be adjusted against the current year’s tax liability. It also called for the refund application facility for Tax Year 2026 to be activated without unnecessary delays.
The tax bar also highlighted problems with property declarations. The current Wealth Statement does not provide a clear field for taxpayers to disclose advance or installment payments made for properties purchased from builders and developers. The KTBA warned that the gap could create discrepancies as the Federal Board of Revenue expands the use of faceless audits and automated systems. PRAL said the proposal would be considered for the Tax Year 2027 return forms.
Another issue concerns taxpayers carrying forward business capital. The current system does not properly carry forward business capital when there is no business income during the year and does not provide separate fields for taxpayers operating multiple businesses. PRAL said the proposal to restore separate business capital declarations would be considered for Tax Year 2027.
The KTBA also called for a more accessible previous year data import facility and an option to retrieve information from the latest filed return rather than an earlier original filing. It further proposed an Excel upload facility to reduce manual data entry, similar to the system available for sales tax returns. PRAL said both proposals would be considered for future tax years.
Problems were also reported in the revision of Tax Year 2026 returns. Although the IRIS portal provides an option to revise returns, the functionality reportedly remains limited.
The KTBA called for the facility to be restored in line with Section 114 of the Income Tax Ordinance, 2001. The meeting also questioned the current 15 day wait for the system to issue an order under Section 120, saying the delay can affect taxpayers’ ability to revise returns and claim refunds.
The meeting also examined issues involving withholding tax, minimum tax calculations, financial statement data and tax residency. The KTBA said taxpayers can face incorrect calculations or information when withholding agents incorrectly categorize taxes, while it also called for manual financial statement data entry to be reduced where electronically readable files are already being submitted.
Several issues were resolved during the meeting, including problems involving acknowledgment receipts, partnership capital percentages and duplicate property entries. PRAL also clarified that vehicle chassis numbers are not mandatory in the Wealth Statement and said the field had been made optional. Other proposed changes will be evaluated for future tax years.
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