Min tax liability issues in new return form: PTBA urges FBR to correct computation

Business Recorder reported that the Pakistan Tax Bar Association has asked the FBR to fix errors in how the IRIS system works out minimum tax under a newly introduced income tax return form. The association, in a letter addressed to FBR Chairman Rashid Mehmood Langrial, said the software wrongly splits taxable income between sources. As a result, tax already collected or withheld is not fully credited against minimum tax, which leads to an extra demand.

According to the letter, the system applies average rates to income from another source, creating a further demand on top of the first. The association argued that tax already deducted should be adjusted rather than disregarded, and that the statute provides for adjustment, not refund. It also said taxpayers with identical taxable income can pay more than those without tax deducted at source, calling this discriminatory.

The PTBA further objected that under the final tax regime income is excluded from the normal-rate base, while the software does not exclude minimum-taxed income in the same way. It also raised concerns that formulas built into the software amount to interpreting the law, which it said is beyond the authority of the Board or PRAL. The illustrations supporting these points were sent separately and are not included in the report.