Online income tax return: form contains some computational errors: expert

Online income tax return devised by Federal Board of Revenue (FBR) for tax year 2018 contains an erroneous formula, grossly understating the tax liability for category of taxpayers having portion of income liable to tax under minimum tax regime (MTR).
A tax lawyer Waheed Shahzad Butt has unearthed anomalies in the tax computation in the income tax return form for the services sector, saying the errors can eventually cause revenue losses to national exchequer, due to short computed tax in the return form.
In this regard, the tax expert has analyzed the return form under the relevant provisions of the law. When contacted, Waheed said, the tax return form for the tax year 2018 on the website of the FBR (IRIS) contains some computational errors. He has filed a complaint regarding this with the Chairman FBR / Secretary Revenue Division.
Referring to a case, he said a total of Rs 443,833/- was computed as tax chargeable with total income of Rs 3M having portion of income liable to tax under MTR at Rs 2.4M with a donation of Rs 300,000/- being deductible allowance under Code 9004 of the return form. This computation is totally wrong, he added. The actual tax payable with the above proposition should be Rs 478,900/-. Resultantly, the exchequer suffers a loss of Rs 35,067/- against a portion of proportionate income of Rs 360,000/- solely due to wrong formula. Percentage of this loss is 9.74% of taxable income, which is quite strange, Waheed added.
The representation states "Income Tax Return form for Tax Year 2018 (114(1) - Return of Income filed voluntarily for complete year) placed on the FBR web-portal "IRIS" with built-in tax computation formulas, contains an erroneous formula, grossly understating the income tax liability. Computational errors can eventually cause revenue losses to National Exchequer. The embedded code for computation of income tax liability for taxpayers, placed in the services sector''s category having income/receipt liable to minimum tax under Section 153(1)(b) of the Income Tax Ordinance, 2001, is defective. Because of Universal Self-Assessment Scheme, all income tax returns are accepted as filed. There is an added risk that such returns may be picked up for audit in case short tax payment is a criterion for selection of returns for audit, causing futile litigation amongst taxpayers and FBR.
Perusal of the income tax return devised by the FBR reflects some strange situation, it grossly understated taxpayer''s due tax liability,'' which may lead to significant loss of revenue, creating problems for both taxpayers and FBR. Tax return placed on the FBR''s web portal appears to be defective, failing to report tax payable correctly in the normal course when there is any entry under Code 9004 of the return (Charitable Donations). One has to resort to various improvisations to get correct results and it is not realistic to assume that such improvisations are within easy grasp of ordinary taxpayers with little or no technical background.
This anomaly is tantamount to maladministration as defined under Section 2(3) of the Federal Tax Ombudsman Ordinance, 2000. It is primarily the duty of the FBR functionaries to collect legitimate revenue from the taxpayers of the country which is legally due, tax expert added.