FBR Abolishes Manual Income Tax Returns, Extends Deadline for Digital Filers

ISLAMABAD: The Federal Board of Revenue (FBR) has officially abolished manual income tax returns for Tax Year 2024, completing the country’s transition to a fully digital tax filing system.

In an effort to facilitate taxpayers accustomed to traditional filing methods, the FBR has announced a two-month extension for manual filers, extending the deadline until November 30, 2025. The board has also launched a nationwide support initiative aimed at assisting individuals and businesses in shifting to online submissions.

Under the new policy, all income tax returns must now be filed exclusively through the FBR’s online portal, a move the authority says will enhance transparency, improve data management, and minimise revenue leakage. To support this transition, dedicated facilitation cells have been established in every regional tax office across Pakistan. These centres will provide free technical assistance for online registration, form completion, and digital filing.

Moreover, the FBR has announced that free legal advisory services will be made available throughout the tax year for taxpayers dealing with complex legal or procedural matters.

Tax experts have lauded the initiative, calling it a “decisive step” toward modernising Pakistan’s tax administration. They believe that the extended deadline and provision of hands-on support will not only promote compliance but also help bridge the gap between the digital and conventional taxpayer segments.

The FBR has urged all former manual filers to visit their nearest regional tax offices to benefit from the assistance services and ensure a seamless transition to the online filing system, which is expected to strengthen transparency and efficiency across the country’s revenue framework.

[ez-toc] ISLAMABAD: The Federal Tax Ombudsman (FTO) has clarified that the Federal Board of Revenue (FBR) is not required to issue any prior notice or intimation before adjusting or recovering sales tax liabilities against income tax refunds.

In a recent order, the FTO stated that Section 170(3)(b) of the Income Tax Ordinance, 2001 places a legal obligation on the Commissioner to apply any refundable amount to offset outstanding tax liabilities under any other law. The order emphasized that such an adjustment is mandated by statute and therefore does not require prior notice to the taxpayer.

The FTO further observed that the issue of refund adjustment is already pending before the appellate forum, and as such, no intervention is warranted under the FTO Ordinance.

Background of the Case

According to details, the tax department had passed an order under Section 170(4) for Tax Year 2017 on September 10, 2025, adjusting an outstanding sales tax demand for Tax Year 2020.

The record shows that a refund of Rs193.29 million was created and adjusted against an outstanding sales tax liability of Rs374.97 million, which had been determined earlier on September 3, 2025.

The FTO’s order stated that the adjustment was in line with Section 170(3)(b), which requires the Commissioner to apply any refund to reduce a taxpayer’s outstanding liabilities under other tax laws.
“Adjustment is obligated by law while passing the refund order in case any liability of the same person is outstanding. Therefore, there is no maladministration involved in this complaint,” the FTO concluded.

Legal Debate

However, members of the legal community have objected to the decision, arguing that the FTO office should have implemented the Supreme Court’s judgment in the Pakistan LNG case, which provides specific guidance on tax adjustments and refund procedures.

Despite these objections, the FTO maintained that the law clearly allows such adjustments without prior notice, reinforcing the FBR’s authority to reconcile cross-tax liabilities automatically.

ISLAMABAD: The Lifestyle Monitoring Cell of the Federal Board of Revenue (FBR) has identified several taxpayers living extravagantly while declaring negligible income in their annual tax returns. The cell has forwarded detailed reports to FBR headquarters and relevant Regional Tax Offices (RTOs) for formal proceedings against the suspected tax-dodgers.

According to sources, the individuals under scrutiny are seen flaunting high-end assets, luxury vehicles, and international travel on their social media accounts, yet their declared income to the FBR remains disproportionately low.

FinTech CEO Owns 30 Luxury Cars Worth Rs2.74 Billion
Among the flagged cases is the owner of a Lahore-based FinTech company, who reportedly owns 30 latest-model vehicles valued at Rs2.741 billion. His collection includes a Lamborghini Aventador (Yellow) worth Rs300 million, a Rolls Royce Phantom (Silver) worth Rs250 million, another Lamborghini Aventador (Black) valued at Rs300 million, and several other high-end models.

Despite owning these expensive assets, the taxpayer’s earlier income declarations show minimal earnings. The FBR noted large discrepancies between his declared income and his visible wealth.

The taxpayer revised several of his income tax returns between 2019 and 2025. In 2019, he initially declared Rs523,493, later revising it to Rs3.4 million. Similarly, for 2020, he increased his declared income from Rs498,193 to Rs2.9 million. In 2022, his revised return showed Rs3.38 million, while in 2025, he declared Rs181.14 million — a sharp jump from Rs131.4 million in the original filing.

Further scrutiny revealed he had enhanced his business capital from Rs750,000 to Rs11 million, increased gold holdings from 10 to 50 tola, and introduced livestock assets worth Rs10.06 million, despite owning no agricultural land. He also reported a watch collection valued at Rs2.34 million and cash reserves of Rs7.34 million.

FBR investigators concluded that a significant portion of his luxury lifestyle was funded by concealed income not declared in tax filings.

Travel Influencer Declares Minimal Income Despite Global Trips
Another case involves a travel influencer from Lahore, who showcased trips to over 25 countries between 2021 and 2025. Her declared income, however, ranged from Rs442,046 to Rs3.79 million during those years.

In 2021, she visited Thailand and the UAE, declaring an income of Rs442,046. In 2022, she travelled to Turkey, Spain, Bosnia, Estonia, Georgia, Hungary, Latvia, the UK, Saudi Arabia (for Umrah), and Dubai, but declared only Rs636,866. The pattern continued in subsequent years, with multiple international trips but modest declared incomes: Rs542,988 in 2023, Rs2.9 million in 2024, and Rs3.79 million in 2025.

Influencer from Islamabad Also Under Review
A social media influencer and content creator from Islamabad is also being examined for a mismatch between declared income and lifestyle. She travelled to 13 countries, including Thailand, UAE, Turkey, Saudi Arabia, Azerbaijan, Malaysia, the UK, Switzerland, Singapore, and the Maldives, while declaring income between Rs3.5 million and Rs5.49 million.

Her public posts displayed luxury items such as Louis Vuitton and Dior handbags, Gucci apparel, a Rolex watch, and luxury cars including a Toyota Land Cruiser V8. The FBR noted her personal expenses alone — Rs0.81 million in 2022 — did not align with her frequent international travel and visible luxury assets.

FBR Facing Revenue Challenges
This scrutiny comes as the FBR grapples with a revenue shortfall of Rs274 billion during the first four months (July–October) of the current fiscal year, against an annual target of Rs14.13 trillion. Officials say lifestyle audits are part of a broader strategy to curb tax evasion among high-net-worth individuals who display significant wealth without proportionate income declarations.

An FBR source said, “Social media has become a key tool for the Lifestyle Monitoring Cell. Many individuals openly display assets and luxury items online, making it easier to cross-check their declared incomes against visible lifestyles.”

The FBR is expected to intensify its efforts by expanding lifestyle monitoring across major cities including Islamabad, Lahore, and Karachi, targeting individuals showing unexplained wealth in real estate, automobiles, and international travel.

ISLAMABAD (October 30, 2025): Tax experts have welcomed the Federal Board of Revenue’s (FBR) decision to constitute a committee aimed at resolving taxpayers’ issues and encouraging maximum filing of income tax returns. However, they have strongly suggested that the deadline for filing tax returns be extended by 7 to 15 days to ensure that the initiative achieves its full potential.

According to tax professionals, the FBR’s committee was formed just two days before the October 31 filing deadline. While the move is a positive step toward better taxpayer facilitation, experts believe that forming the committee at such a late stage leaves little time for taxpayers to benefit from its assistance.

“The committee has been constituted at the last hour, leaving taxpayers with only two days to interact — which is practically impossible,” said one senior tax consultant. “An extension of one to two weeks would allow maximum taxpayers to file their returns comfortably.”

Experts appreciated the FBR’s effort, calling it a wise but delayed decision, and emphasized that an extension of the deadline — ideally up to November 15, 2025 — would help meet the government’s return filing targets.

They further suggested that such committees should be notified every year between July and September, aligning with the annual return filing season, to ensure smoother facilitation and improved taxpayer confidence.

The Federal Board of Revenue (FBR) has stated in its latest Tax Expenditure Report 2025 that the Regulatory Duties (RD) and Additional Customs Duties (ACD) imposed through various Statutory Regulatory Orders (SROs) were essentially temporary measures introduced to curb rising imports and address the country’s worsening current account balance, and while these duties were designed as time-bound interventions their exemptions and concessions are still treated as deviations from benchmark rates for the purposes of the tax expenditure analysis, meaning any relief or preferential treatment granted under these duties is counted as revenue foregone. According to the report, these temporary duties and their related concessions led to a significant Rs161 billion revenue loss in fiscal year 2023-24, highlighting the cost of using regulatory tools to manage imports and protect the balance of payments. The FBR noted that the statutory rates for Customs Duty (CD), Regulatory Duty (RD) and Additional Customs Duty (ACD) have been established as benchmark rates for this analysis and that customs-related exemptions and concessions are typically subject-specific, varying based on the nature of goods or services involved. In calculating Customs Expenditure for the report, the period under consideration was the entire fiscal year 2023-24 in order to assess how these duties, exemptions and concessions affected government revenue and outlays during that period. The disclosure offers one of the clearest indications yet that regulatory and additional duties were never intended to be permanent and may signal a future phasing out of some of the additional tariffs as the external sector stabilizes, but it also underscores the delicate balance policymakers must strike between protecting revenue streams and supporting economic activity, since these duties can offer immediate relief to the current account deficit but also raise import costs for businesses and consumers and lead to measurable losses in revenue. Economists and trade experts argue that a more transparent and predictable customs policy with clear timelines for phasing in or phasing out such duties could help businesses plan better and reduce the perception of ad hoc changes in import tariffs, making the FBR’s Tax Expenditure Report 2025 a key document for understanding the impact of Pakistan’s temporary trade measures on both government finances and the broader economy.

[ez-toc]ISLAMABAD – The Federal Board of Revenue (FBR) is expected to grant a short extension in the deadline for registered persons to integrate their invoicing systems with the tax authority’s sales tax platform, it is learnt. Business circles have repeatedly sought a three-month extension to allow a smoother transition to the digital invoicing system. However, officials say the FBR is more likely to allow an additional 15 to 30 days rather than the full three months being demanded.

Business Community Requests Relief

In a recent communication, Karachi Chamber of Commerce & Industry (KCCI) President Muhammad Jawed Bilwani urged Member Inland Revenue Operations to extend the integration deadline and to establish a facilitation desk at trade bodies to assist taxpayers with free-of-cost integration through Pakistan Revenue Automation Limited (PRAL). Bilwani noted that despite the business community’s willingness to comply with the new system, a significant number of taxpayers have been unable to complete registration through the four authorised integrators because of the sheer volume of applications within a very short timeframe.

Background of the Deadline

Under SRO 1413(I)/2025 dated August 1, 2025, deadlines for registration have already passed for the first three categories — all public companies, all other companies with turnover exceeding Rs1 billion as declared in their sales tax returns for the last twelve months, and all importers. Their deadline was August 10, 2025. From September 1, 2025, FBR field formations are legally allowed to start issuing the first penalty notice of Rs500,000 under Section 25A of the Sales Tax Act 1990 to all those registered persons who have not yet integrated their invoicing system with FBR or begun issuing Electronic Invoices.

Need for Flexible Implementation

Bilwani stressed that while large public companies and firms with turnover above one billion rupees are generally ready to comply with SRO 1413(I)/2025, many small, medium and seasonal importers cannot immediately make integration arrangements and start issuing Electronic Invoices. He said FBR should take this aspect into consideration before initiating penal action.

Proposed Facilitation Measures

To ease the transition, KCCI has proposed the establishment of an online Helpdesk at the chamber with a dedicated focal person from FBR accessible to members via Zoom during office hours. This would provide real-time guidance on technical issues and support taxpayers in completing the integration process without disruption. Bilwani maintained that a short extension would provide much-needed relief, encourage wider compliance and ensure smoother implementation of the digital invoicing system.