ISLAMABAD: The Federal Tax Ombudsman (FTO) has found 30 unnecessary sections in the income tax return form used by the salaried class and directed the Federal Board of Revenue (FBR) to create a new form having only minimum fields relevant to income sources within one month.
The total number of fields visible on income tax returns for salaried and pensioner class is 34. Of these, only four fields are relevant to earning income from salary and pensioner class while the remaining are irrelevant.
Legal Advisor Almas Ali Jovindah, FTO Registrar Majid Qureshi and Income Tax Advisor Naseer Butt briefed the media on the findings and recommendations of the ombudsman to the FBR on Tuesday.
The ombudsman directed the FBR members (Policy) and (Information & Technology) to devise a new return form for salaried individuals having only minimum fields relevant to his/her source of income and also reopen a new window in the existing Iris for the salaried taxpayer within 30 days.
The issue came to the surface following an investigation launched by the FTO in the income tax return form to identify hardships caused to salaried individuals and pensioners, said Almas Jobindah. He further said that comments were sought from the FBR over the issue.
Currently, more than 1.4 million salaried and pensioners are facing this hardship while filing their tax returns.
The tax return form in the current format is too cumbersome to understand which contains many fields which are not relevant to a taxpayer. He further said that only 11.76pc fields are relevant to a person who earns income only from salary and pension.
He further said that there are seven steps involved in this process. However, each step has various tabs ranging from two to 27 and the total tabs involved in these steps come to 66. This means that a salaried taxpayer having income source only from salary or pension has to scroll through as many as 66 different tabs to reach the closure of the return filing exercise.
The FTO registrar said that the so-called simplified form introduced through software wizard is also beyond the comprehension of an ordinary individual who is neither familiar with tax terminology nor computer literate.
“Therefore, there is a dire need to devise a separate salary return in simplified form or provide a separate window in Iris to facilitate taxpayers”, he said.
Adviser Income Tax Naseer Butt said that a large number of 4.2 million taxpayers on the Active Taxpayers List fall in the category of fixed income group, being either salaried class or pensioners.
Further analysis suggested that tax paid with the returns form by salaried individuals was quite negligible because the tax was withheld at source at the time of payment of salary, he added.
Moreover, the income of pensioners is exempt from tax, while the remaining source of income was mostly profit from different savings schemes and profit of debt on bank deposits. Therefore, no further payment of tax is payable by the salaried individuals and pensioners at the time of filing the return.
Published in Dawn, September 6th, 2023