The Pakistan Tax Bar Association (PTBA) has urged the Federal Board of Revenue (FBR) to remove legal and technical flaws in the newly introduced Income Tax Return for Tax Year 2026 and review the Fixed Tax Scheme for small traders, warning that the current framework could create serious compliance difficulties.

In a letter to FBR Chairman Rashid Mehmood Langrial, the PTBA welcomed the tax authority’s digitization efforts but expressed concern over the delayed launch of the revised return on the IRIS portal, saying taxpayers and practitioners have been left with little time to understand the new filing requirements.

The association identified several issues with the redesigned return, including errors in imported immovable property data, incomplete withholding tax records, and difficulties in locating tax information in the new auto-populated format. It warned that these problems could delay return filing and increase compliance risks.

PTBA also criticized the FBR for introducing the revised return without adequate consultation with tax professionals, arguing that stakeholder engagement could have resolved many operational issues before implementation.

The association further questioned the legal basis of the Fixed Tax Scheme for Small Traders introduced through SRO 1166(I)/2026. It argued that the prescribed Annex-I cannot legally replace the statutory income tax return under the Income Tax Ordinance, 2001, without explicit legislative backing.

The PTBA also sought clarification on several aspects of the scheme, including eligibility criteria, treatment of taxpayers with multiple income sources, audit protection, withholding tax obligations, penalties for non-compliance, and exemptions from Point-of-Sale (POS) integration and digital invoicing.

The association urged the FBR to revise both the new tax return and the trader scheme in consultation with stakeholders to remove ambiguities and facilitate smooth tax compliance before full implementation.