FBR Urged to Fix Serious Issues in Filing of Income Tax Returns for Tax Year 2025

Tax professionals, chartered accountants, tax lawyers and tax advisers are facing major issues in filing of return and apprehended that delay in issuance of new return form will impede timely compliance with the statutory deadline of September 30, 2025. In this regard, the International Lawyers Association (ILA) has written a letter to the Chairman Federal Board of Revenue (FBR) to highlight serious and persistent difficulties being faced in the filing of income tax returns for Tax Year 2025. According to the letter of the ILA to FBR Chairman, the Federal Board of Revenue, through SRO 1212(1)/2025 dated July 8, 2025, published the draft Income Tax Return under Rule 34A of the Income Tax Rules, 2002, which requires final notification within thirty days. However, despite the lapse of this statutory period, the final return for Tax Year 2025 has not yet been issued. This delay is causing serious uncertainty and operational difficulties for taxpayers and tax practitioners, and is likely to impede timely compliance with the statutory deadline of September 30, 2025. To make matters worse, the IRIS e-filing system continues to suffer from serious technical and functional issues, including but not limited to Non-Adjustment of Tax Withheld under Section 235 in the Case of AOPs. In cases where the declared tax liability is fully met through tax withheld under Section 235 of the Income Tax Ordinance, 2001, the system correctly shows “Nil” tax demand. However, upon submission, it issues a Inconsistent Treatment of Tax Withheld under Sections 148 and 154: While both regimes are deemed to discharge minimum tax liability under the amended provisions, the system allows editing of income for imports (Section 148) but does not allow such editing for exports (Section 154). This inconsistency creates confusion and unequal treatment among taxpayers operating under similar mechanisms. Non-Opening of Return Forms for Non-Resident Taxpayers: When “Non-Resident” status is selected based on the duration of stay in Pakistan, the system fails to open the return form, and even the “Review and Submission” option is disabled, effectively preventing non-residents from filing returns. The ILA pointed out that many users are unable to log in at all, and even when login is successful, the system responds extremely slowly or hangs midway, causing delays in filing and unnecessary mental distress to taxpayers and professionals alike. In addition to these substantive glitches, we are facing widespread technical issues: Despite repeated representations by the legal and tax fraternity to the relevant PRAL and FBR officials, the problems remain unaddressed. The persistent malfunctioning of PRAL’s software is now on the verge of paralyzing the return filing process, risking a serious loss to the national exchequer and further shaking public confidence in the country’s tax administration. The FBR should immediately issue the final Income Tax Return for Tax Year 2025 in compliance with Rule 34A. The FBR should rectify the identified system glitches, ensuring proper tax adjustments and consistent treatment under relevant sections. The FBR should also resolve the non-resident filing block without delay. The department should strengthen IRIS server performance, especially during peak filing days. The FBR must ensure accurate and timely updates to pre-filled data. The FBR should also enhance taxpayer and professional support services for swift resolution of issues, ILA added. The International Lawyers Association (ILA) is an independent, non-profit professional body representing solicitors and legal professionals across the globe. With over 3,000 members including law firms, senior advocates, and tax practitioners, ILA works to promote the legal profession, strengthen the rule of law, and uphold justice worldwide. The Lahore Chapter of ILA, comprising experienced advocates, tax experts, and legal consultants, has been actively representing the concerns of the legal fraternity and taxpayers in Pakistan.