The Federal Board of Revenue (FBR) has ordered to re-enable the refund adjustment tab in the income tax return forms to ensure smooth filing of returns and improve ease of doing business and decrease the cost of compliance for taxpayers. This facility will allow taxpayers to adjust their pending refund claims against admitted liability of Tax Year 2022 at the time of filing tax returns.
According to FBR officials, the refund applications filed up to 27.09.2022 are eligible for adjustment of refunds. Also, the facility is available to all taxpayers who have not claimed excess adjustment against the previous year’s refunds.
The online income tax refund facility was launched in 2009 with the aim to facilitate the taxpayer payment of income tax returns. Recently, the Federal Board of Revenue (FBR) removed a tab from the new income tax return form for Tax Year 2022. As per the decision, taxpayers could not adjust their tax liability for the year against refunds for the previous year.
The decision to remove the adjustment facility has created a buzz and the central body has received a number of representations from various tax bars, businesses, and other stakeholders on the issue of the non-availability of the refund adjustment tab in the return forms. After this FBR has proposed to enable the adjustment tab, an online portal for tax return filing.
It has been observed that for some time, there have been several errors/glitches in the return filing including the removal of the refund adjustment facility. In this regard, Pakistan Tax Bar Association (PTBA) has urged the Federal Board of Revenue (FBR) to fix glitches in the Iris portal for smooth return filing for the tax year 2022.
An efficient and error-free tax system plays a crucial role in improving sustainable and equitable economic growth in a country. Having an improved tax collection system helps increase revenue mobilization, sustainable growth, and reduced compliance costs.
To improve tax mechanisms in Pakistan, the government needs to improve the taxation system by introducing new digital techniques and offering taxpayers support to create a stimulated and professional workforce. The central authority must focus on simplifying tax laws to create a taxpayer-friendly environment and develop an honest and efficient tax administration to raise government revenue.