FTO orders FBR to fix IRIS glitch blocking pension tax credit

KARACHI: The Federal Tax Ombudsman has ruled that the Federal Board of Revenue cannot cite limitations in its own IRIS software to deny a taxpayer a legal benefit available under the law, and has directed the authority to address the system issue.

The order was issued on a complaint filed by a salaried individual, who also serves as a director in a private limited company, through counsel Muhammad Aleem. According to the complaint, the taxpayer had invested in an Approved Pension Fund, making him eligible for a tax credit of Rs2,341,120 under Section 63 of the Income Tax Ordinance, 2001.

The complainant said the correct credit could not be claimed while filing the tax return for tax year 2025 because of constraints in the IRIS portal. As a result, he deposited Rs217,188 to ensure the return was filed on time and to avoid possible penalties.

In its ruling, the ombudsman held that the FBR could not avoid responsibility by pointing to technical problems in its software when a substantive legal right was at stake. The FTO directed the board to remove the glitches that were preventing the lawful tax credit from being availed under Section 63.