The Karachi Tax Bar Association (KTBA) has raised serious concerns about incorrect tax treatment under the “IRIS” system, along with systematic issues and errors, as well as tax treatment under the new Income Tax Return Form.
In a letter to the Chairman of the Federal Board of Revenue (FBR), the association highlighted important operational challenges at the IRIS Portal, which is to submit income tax declarations for the tax year 2025.
According to the KTBA, the lack of response by the FBR shows that the difference in legitimate concerns or interpretation is ignored, which may show why the issues reported are not solved. The association said that in the absence of a corrective action or explanation, it should present its concerns to maximum health to ensure that they are focused properly.
Tax credit on donations against surcharge
The KTBA said that the IRIS System does not allow or allow tax credit for donations under section 60 of the ordinance against the surcharge payable under section 4 AB. It says it contradicts the legal scheme.
The ordinance description “Tax” as a tax 2 () 63) as any tax imposed under Chapter II, which includes fines, festivals, charges, or other payments. Since the surcharge under Section 4 AB falls under Chapter II, it should be considered as a tax. Therefore, a surcharge should be considered when computing tax credit on donations.
Sub -section (2) of Section 60 further explains that such surcharge includes “tax amount for this person for the year of tax”. The KTBA emphasized that taxpayers have a fundamental right to strictly determine their responsibility according to the law, and that disputes on interpretation should be resolved through amendment, not through system flaws.
Adjustment of surcharge against advance tax
The KTBA said that the IRIS will adjust the files files under section 4 AB against the advanced tax against the advance or the hero, rather than prepare a separate PSID to pay the surcharge. The Association argued, it is a violation of the law, because under the surcharge chapter II, the overall tax is part of the tax responsibility and it should be adjusted against the advance tax like any other tax.
It further states that treating the surcharge as a separate responsibility can be taxed twice. The KTBA demanded immediate reform of the IRIS system or the issuance of a clear notification, explaining the correct legal interpretation.
Extra Ved Holding (100 BA) should not be considered as a minimum tax
The Association did not agree to treat additional treatment as a minimum tax under Section 100 BA and 10th schedule. It argues that the additional tax collected under this section cannot be considered as part of the minimum tax responsibility, as the income tax year is specific and last year’s compliance status cannot affect next year’s responsibility.
The KTBA emphasized that the intention of the legislation is compliance, the tax is not maximum. Treating additional prevention as a minimum tax, it has warned that the tax system reduces confidence, discourages voluntary compliance, and creates unnecessary conflicts.
The Association demanded that the FBR either correct the IRIS system to reflect it or issue an express explanation.
Tax deductions on electricity bills
Section 235 provides two separate treatment for tax bills (except companies).
(i) Annual bills for taxpayers. 360,000, the collected tax is considered a minimum tax, without any refund.
(ii) with monthly bills for taxpayers that are more than rupees. 30,000, the collected tax should be adjusted against the final responsibility.
The KTBA pointed out that Irris currently offers all such taxes as a minimum tax, which ignores the adjustable nature of the high amount of bills. It said the misuse refuses to accommodate taxpayers to adjust their legal right to adjust taxes.
The Association demanded that the FBR immediately correct the Irus irregularities and ensured compliance with Section 235.