KTBA demands e-filing extension amid tax return ‘glitches’

KARACHI: The Karachi Tax Bar Association (KTBA) is calling for an extension on the deadline for e-filing sales tax returns under Section 26AB until existing e-filing issues are resolved.

In a letter to the Federal Board of Revenue (FBR) on Monday, the KTBA requested that this extension be automatically applied to all registered users on the IRIS system, unless specifically declined.

The KTBA also proposed implementing a system to keep taxpayers’ status as ‘Active’ on IRIS if they encounter issues with e-filing due to system glitches. It suggested that the initial return submission should be recorded as final on IRIS to avoid inactive status.

The KTBA asked for the activation of Serial 07 of the sales tax return along with Annexure-A and for Row 29 to be editable for necessary adjustments.Highlighting ongoing challenges, the KTBA criticized SRO 350 of 2024 for complicating the e-filing of monthly sales tax returns. According to the new rules, a taxpayer cannot file their sales tax return if their suppliers or vendors have not completed their sales tax liabilities or submitted their returns as required. This creates issues for taxpayers in adjusting their input tax and carrying forward tax credits.

It also causes problems with refundable claims related to exports, particularly those listed in Row 29 of the sales tax return. Additionally, issues such as the ‘Row 29 cannot be greater than Row 28’ error disrupt the submission process, leaving returns provisional and uneditable.

The KTBA noted that taxpayers are struggling to meet filing deadlines due to this error, and non-filing for two consecutive periods has led to taxpayers being marked as non-active on the IRIS portal. This status results in an additional 4.0 per cent sales tax charge under Section 3(1A) of the Sales Tax Act, which is not adjustable.