According to the FBR's instructions issued to the field formations Saturday, Regional Tax Office-III, Karachi, has reported an issue to the IT Wing FBR, concerning the miscalculation of tax liability in the case of a company, where 'Iris' calculates the liability @25 percent whereas the subject company is not a small company. The reporting of this issue reveals a lack or understanding or the processes and the system and it is essential to clarify the situation so that such misunderstanding does not arise in any other Large Taxpayer Unit (LTU) or Regional Tax Office (RTO).
The calculation of tax liability in Iris is based on business rules embedded in the system. The decision on what rate to apply depends on the person type given in the taxpayer's profile, if it is a small company according to the profile, the system will automatically apply the rate applicable to small companies. It is important to note here that the system has no mechanism to judge on its own whether the company is actually a small company or not, and is totally dependent on the information given in the person's profile. It is primary responsibility or the assessing officer to verify/identify the actual status or the taxpayer in the system before passing final order, the FBR said.
In case the person type of a company is wrong in the profile, there are two possible ways to rectify the same, as follows:
Firstly, the taxpayer applies for change or status of company through 'Iris', the application for change or rate of tax for companies is provided in the registration tab in the system. In response to the application, the concerned commissioner passes an order changing the person type of the company. As soon as the order is passed, the system will automatically amend the taxpayers profile and the correct rate will be applied when making tax calculation:
In case there is no application from the taxpayer, the concerned commissioner can email the request for change in the person type of the company from his official email address to [email protected] and the amendment in profile will he made.
All officers may be directed to ensure, at the time or making an assessment, that the company's profile reflects the correct person type and the correct rate is being applied. In case the profile needs to he amended, one or the above two options may be used.
Chief commissioners are further informed that IT wing is in the process of providing the facility to the commissioner to pass an order to this effect directly without any application from the taxpayer. This facility is expected to be available in Iris within a fortnight, after which there would be no need to email to IT wing for these issues and the commissioner will be enabled to change the rate in the system directly, the FBR added.
Copyright Business Recorder, 2017