KARACHI, Sept 20: The Karachi Tax Bar Association (KTBA) has rejected the draft of income tax return forms issued by the Federal Board of Revenue only 13 days before the last date for filing of returns for tax year 2011.

The tax bar also rejected a number of amendments and changes, including annexure proposed by the FBR in the new tax return form on the ground that it was, too, late to seek such a lengthy information and details about the expenditures of taxpayers.

The FBR last Saturday for the third time notified a draft return form with a last date falling on September 30, 2011. Under the law it is mandatory that comments should be sought from the stakeholders before finalising the draft tax return form and in this case the board only allowed three days which tax bar believes are insufficient.

The KTBA is highly critical of the FBR for proposing drastic changes in the draft tax return form notified through SRO 850(1)/2011 on Sept 17, 2011.

While expressing serious reservation about the new draft of return the tax bar reminded the board that already a large number of taxpayers have collected and collated information based on earlier draft form notified through SRO 793(I)/2011 dated August 24. The KTBA said that these returns were in the process of filing or are being uploaded for e-filing.

The tax bar demanded of the FBR to allow the use of previous tax return form issued through SRO 793(I) and if any changes are deemed to be necessary they should be introduced for tax year 2012, after taking stakeholders on board.

The bar is critical of the FBR for overburdening the existing taxpayers by seeking additional information pertaining to personal expenditure and warned that it would be counterproductive in broadening the tax base and would scare off new taxpayers.

The KTBA stated that FBR has to recognise and appreciate the provision of law before a return of income is prescribed. Tax bar President Anwar Kashif Mumtaz cautioned the FBR not to cross the limits of law governed by Income Tax Ordinance, 2001.

It further stated that the fact is that section 4A (flood surcharge) was not made part of Finance Act, 2011 and as such it was not a part of Income Tax Ordinance, 2001 with effect July 1, 2011.

The KTBA stated in the new return of income (SRO 850), de facto, through return of income, levy of flood surcharge on prorate basis is being legislated, which is illegal and will be challenged in court of law delaying the filing of timely returns.

The bar further said that the draft form of return notified through SRO 850(I) on Sept 17, has been put online for e-filing on Sept 19, that is before the expiry of period of three days given for soliciting views from the stakeholders.