ISLAMABAD: The Pakistan Tax Bar Association has urged FBR to urgently fix a calculation error in its new income tax return form, warning that it is charging some taxpayers more than the law actually requires.
In a letter to FBR Chairman Rashid Mehmood Langrial, the PTBA said the fault lies in how the IRIS system handles “minimum tax,” a baseline amount already deducted or withheld on certain kinds of income that the law says should count in full toward a taxpayer’s minimum tax obligation.
Instead, PTBA says, IRIS splits a person’s income across different sources and taxes the remainder at an average rate, effectively piling an extra, unjustified demand on top of tax already paid.
To illustrate the unfairness, the bar association pointed out that two taxpayers earning the exact same income could end up owing different amounts, with the one who had tax withheld in advance actually paying more overall than someone who didn’t, purely because of how the system calculates things.
PTBA noted that the law already deals with a similar scenario correctly under the Final Tax Regime, where income taxed at source is treated as a separate block and excluded from normal-rate calculations. It says IRIS fails to make the same exclusion for minimum tax cases, meaning the same income essentially gets taxed twice.
The association has shared sample calculations with FBR to back up its claim and argued that building such formulas into the software amounts to interpreting the law itself, something it says neither FBR nor its technology arm, PRAL, has the authority to do, particularly since taxpayers have no option but to accept whatever the system generates.
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