income tax returns filing date extended to October 31, 2022

ISLAMABAD: Federal Board of Revenue (FBR) granted a one-month extension in filing income tax returns for fiscal year 2022 on Friday. FBR issued Circular No. 16 of 2022, which extended the deadline for filing income tax returns for fiscal year 2022.

According to the circular, the FBR extended the deadline for filing annual returns from September 30, 2022 to October 31, 2022

FBR extended the deadline for income tax returns filing

Chambers and associations have requested that the FBR extend the deadline for filing income tax returns, which is set to expire on September 30, 2022.

In a letter to the Finance Minister, Karachi Chamber of Commerce and Industry (KCCI) President Muhammad Idrees asked that the FBR extend the deadline for filing income tax returns from September 30, 2022, to December 31, 2022, in light of the unusual situation that has emerged across the nation as a result of recent rainfall and flash floods.

He claimed that people from various walks of life and members of the commercial and industrial community frequently approached the chamber to request that the deadline be extended until December 31, 2022.

“Due to the imposition of an import ban, which was followed by an unusual situation all over the country emerging after torrential rainfalls and flashfloods, taxpayers, particularly members of the business and industrial community, are facing a lot of problems,” he said.

READ MORE : What is the deadline for submitting income tax return?

It was well known that all business, commercial, agricultural, and other activities in flood-affected areas had come to a halt, causing serious cashflow issues, and that it would take at least two months to return to normalcy.

In this scenario, it has become unavoidable to provide relief to loyal taxpayers in the form of an extension in the last date; therefore, keeping in mind the ground realities, he requested the Finance Minister to direct the FBR to extend the last date for filing income returns to December 31, 2022, which will be widely welcomed by loyal taxpayers across the country.

Additionally, the portal for filing returns has some bugs that tax professionals claim have not yet been fixed.

Recently, the Karachi Tax Bar Association (KTBA) called attention to issues with the online return form. It stated that because the income tax Return Form does not have a column for the adjustment of bringing forward capital losses under the head of capital gains, the tax on capital gains cannot be calculated properly.

The Tax Credits Annexure of income tax returns for salaried individuals accidentally includes the Column of Tax Credit for Specified Industrial Undertakings u/s 65G of the Income Tax Ordinance, 2001, even though there is no relationship between the two.

Although the rate of tax on contract receipts under section 153 was lowered from 7.5% to 7.0% for Tax Year 2022, the return for TY 2022 that is published on IRIS does not include a column reflecting the lower rate.

The final SRO 1733(1)/2022 was released on September 13, 2022, however the draught manual return forms for individuals and AOPs for the tax year 2022 were released belatedly on August 26, 2022. As a result, just 17 days—insufficient under the law—have been given to file the manual returns.

The IRIS portal is calculating incorrect tax liability on gain on sale of immovable properties, which is a violation of section 37(1A) of the income tax Ordinance, 2001, and must be corrected as soon as possible.

The IRIS portal calculates incorrect tax on profit/yield on Bahbood Certificates, Pensioner’s Benefit Accounts, and Shuhada Family Welfare Accounts, in violation of clause (6) of Part-III, 2nd Schedule of the Income Tax Ordinance, 2001, which states that tax shall not exceed 10% of such profit/yield.

Due to the lack of an option list in the drop downs for country and currency under Code “7006” with the description “Investment (Non-Business) (Account / Annuity / Bond / Certificate / Debenture / Deposit / Fund / Instrument / Policy / Share / Stock / Unit, etc.),” a taxpayer is unable to file the Foreign Income & Assets Statement under section 116A(1) of the Ordinance.

“Reconciliation of Net Assets” displays opening wealth. Despite the fact that the taxpayer’s residency status is selected as “non-resident” for Tax Year 2022, he should not be required to file the wealth statement, which includes net asset reconciliation, under code ‘703002’.

The withholding rates on dividend payments of 7.5 percent, 15%, and 25% (under Section 150 of the Ordinance) appear in the income tax Return Form of “Income for a person deriving income solely from salary and other sources,” but Column Code 64330052 (Dividend u/s 150 @25%) is missing.

By Finance Act, 2020, a provision was added to section 22(2) of the Tax Ordinance that reduced depreciation on additions to fixed assets made after 01-Jul-2020 by 50%. When entries related to written down values are entered as opening values in the depreciation schedule, the IRIS calculates depreciation at 50% of total values.

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