PBC Urges FBR to Fix Tax Credit Glitch in IRIS System for 2025 Returns

The Pakistan Business Council (PBC) has raised serious concerns about a major technical glitch in the Federal Board of Revenue’s (FBR) IRIS system, which is affecting the calculation of tax credits for the tax year 2025.

According to PBC, the issue has hit highly skilled professionals and top taxpayers working for its member companies. Many of these individuals actively contribute to charitable causes and invest in voluntary pension funds, but due to a system error, their rightful tax credits are not being properly applied.

PBC Urges FBR to Fix Tax Credit Glitch in IRIS System for 2025 Returns

PBC explained that the main problem lies in the incorrect computation of tax credits for charitable donations under Section 61 and contributions to approved pension funds under Section 63 of the Income Tax Ordinance, 2001. The IRIS system reportedly fails to follow the legal provisions, leading to errors and delays in tax return filing.

The council also pointed out that the Finance Act 2024 introduced a new surcharge under Section 4AB, set at 10% of income tax. This surcharge applies to individuals and associations of persons with a taxable income exceeding Rs. 10 million.

PBC emphasised that, under Section 2(63), the law defines “tax” to include any tax imposed under Chapter II, which means the surcharge under Section 4AB should be treated as part of the total tax. Furthermore, Section 149 supports this interpretation, as it specifically refers to the “tax under Section 4AB” when discussing advance income tax deductions from salaries.

IRIS System Excluding Surcharge

Despite these clear legal provisions, the IRIS system currently excludes the surcharge when calculating tax credits under Sections 61 and 63. PBC argues that because both sections base the credit on the total tax assessed, they must include the surcharge in the calculation.

Call for Immediate Action

The council has urged the government to step in and direct both FBR and PRAL to fix the problem immediately. It cautioned that unresolved issues could further complicate the ongoing tax filing process.

PBC also stressed the importance of ensuring that the IRIS system fully complies with the law. So taxpayers can get the tax credits they rightfully deserve. By correcting this anomaly, FBR can restore taxpayer confidence and prevent unnecessary delays during the 2025 filing season.

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