FBR Online Tax Return – FAQs

Federal Board of Revenue – Government of Pakistan has created different help files and tutorials to facilitate taxpayers in e-filing their tax returns. However, still many individuals have their unique and specific issues and they want their queries to be answered. Keeping this in mind, I have created this Frequently Asked Questions (FAQs) blog post. I have tried to answer those questions that are frequently asked by the taxpayers:

Q1. I submitted my tax return and received 120 (Order to make Self assessment). What does it mean?
It is just an acknowledgement and auto-generated confirmation by fbr for successful return submission. You are not required to do anything in response. It is a message to ask the taxpayer to recheck everything to avoid any repercussions in future.

Q2. If I file the return for the first time, do I also have to file all previous returns?
If you file for the first time, you will have to at least file the returns for two years to be included in Active Taxpayers’ List (ATL). For example, if you file for Tax Year 2020 for the first time, file for Tax Year 2019 as well for appearing in ATL. You will also get notice for all the previous years where you were eligible for filing and you may comply subsequently on these notices as well. Iris system was introduced in 2014, so you may get notice up to that year. If you started your earnings in 2020 and filed for Tax Year 2020, then you will have to wait till March 01, 2021 to appear in ATL.

Q3. What is Iris?
Iris is an integrated, end-to-end, highly configurable and customizable ERP used by fbr, It covers all business processes of Income Tax and Sales Tax. Iris is a word not an acronym. It is name of a flower which is a symbol of wisdom. You can login from multiple sessions simultaneously. As a security measure, your current session automatically closes after 15 minutes of no activity.

Q4. How can I get my NTN Number and NTN Certificate from fbr?
Earlier, fbr used to send hard copies of NTN certificates to taxpayers, but this option is no longer available. Now, this option is available in Iris system. In the Home Page, there is an option of Registration Certificate that you can use to print the certificate.

Q5. I printed the registration certificate but it does not show NTN Number?
If you have received your password and pin code for Iris, then your NTN Number is also created by the system. You can view it as follows:
Click the link below:
https://e.fbr.gov.pk
In the above link, select Search Taxpayers and click NTN Inquiry. A new page will be displayed. Make sure that Online NTN/STRN Inquiry is selected in the left menu. Check your status by selecting CNIC in Parameter Type. Enter CNIC (without dashes) in Registration No., enter the Verification Code and click Verify. In the details shown, NTN Number will be mentioned under Reference No field.

Q6. Which option should I use for Income Tax registration?
181 (Form of Registration filed for modification) (Income Tax)

Q7. Which option should I use for filing the annual return of income?
114(1) (Return of Income for a person deriving income only from salary and other sources eligible to file salary return). This option should be used if the income of an individual chargeable under the head ‘salary’ exceeds seventy-five per cent of his taxable income. In the other case, the person will be considered as a Business Individual and s/he will file Normal Return (Ind/AOP/COY).

Q8. What is the penalty of not filing the annual return of income?
According to section 182 of Income Tax Ordinance, 2001, the maximum penalty is Rs. 40,000 if an individual fails to file the return of income within the due date.

Q9. What is the penalty of not filing the wealth statement?
According to section 182 of Income Tax Ordinance, 2001, the minimum penalty is Rs. 100,000 if an individual fails to file the wealth statement or wealth reconciliation statement within the due date.

Q10. What is the surcharge for appearing on ATL upon filing the return after the due date?
According to section 182A of Income Tax Ordinance, 2001, the person shall be included in the ATL on filing return after the due date, if the person pays surcharge of Rs. 1,000 in case of an individual.

Q11. What is the punishment of not filing the annual return of income and wealth statement?
According to section 191 of Income Tax Ordinance, 2001, a) if a person fails to.comply with a notice under sub-section (3)and sub-section (4) of section 114 or sub-section (1) of section 116; shall commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding one year, or both. If a person convicted of an offence under clause (a) of sub-section (1) fails, without reasonable excuse, to furnish the return of income or wealth statement to which the offence relates within the period specified by the Court, the person shall commit a further offence punishable on conviction with a fine not exceeding fifty thousand rupees or imprisonment for a term not exceeding two years, or both.

Q12. When I click ‘My Profile’ in Iris, a blank page is shown with only one tab ‘Personal Details’?
At the top right of the Profile page, there is a Search box. Enter your CNIC number without dashes in the Search box and click the Search icon. Your profile will then be displayed. This may occur if your are added as an agent for multiple users. If you print your 181 (Form of Registration Filed for Modification) (Income Tax), you may see an entry with your registration number under the heading ‘Links’. The capacity column under this heading will show ‘Advisor / Attorney / Consultant’. It means you are listed as a consultant for someone beginning the Link Start Date.

Q13. How does MIS option work in Iris?
Fbr has added a new option MIS in Iris. This option will direct you to the Information Center. Here, you can check the information available with fbr under the following head: Foreign Assets, FCY Domestic, Domestic Assets, and Payment Details. This option is useful for matching your entered details with the fbr’s record.

Q14. Where is the option to enter salary amount in Iris?
Pay, Wages or Other Remuneration (including Arrears of Salary), Code 1009.

Q15. I receive remittance from my blood relatives who are settled abroad. Is it taxable?
Remittance received from blood relatives is not taxable.

Q16. How much income is exempted from Income Tax for the Tax Year 2021?
Income up to Rs. 600,000 is exempted from income tax for the salaried individuals and Rs. 400,000 for business individuals for the Tax Year 2021.

Q17. I received an error message, ‘Admitted Income Tax against Code xxxx must be paid before submission’?
It means that the system calculated the tax chargeable, and the tax chargeable is more than the tax paid by you and the tax deducted by the withholding agent. This amount is shown as ‘Admitted Income Tax’. You will have to pay the Admitted Income Tax by online payment methods or in cash to National Bank to enable submission.

Q18. If I need to pay the Admitted Income Tax, which payment options are available to me?
You can pay through ADC (e-payment), Credit Card, Direct Debit, Pay Order, Cheque, Cash, and JazzCash.

Q19. I am a freelancer and my foreign clients deposit money in my rupee bank account. Are my earnings exempted from income tax?
There is no precise Freelancer category available in Iris. According to some interpretations, the freelancers’ income is exempted from Tax because usually it is income from IT/software exports. But even in that case, your income should be received from the foreign channels (not locally) and the receiving should be from the banking channels. You will have to select the Normal Return (Ind/AOP/COY) for filing the annual return of income that applies to business individuals (and not salaried individuals). Show the earnings received in the row of Foreign Income. Also enter the same amount in the Exempt column. Pakistani Banks also provide PRC (Proceed Realization Certificate). You must obtain this certificate for your record and reference. According to some tax experts, freelancers should be registered with Pakistan Software Export Board (PSEB) for tax exemption; however, according to other experts, there is no need of it for freelancers. According to clause 133 of Part 1 of the Second Schedule of ITO, Incomes, or classes of income, or persons or classes of persons, exempted from tax include Income from exports of computer software or IT services or IT enabled services upto the period ending on 30th day of June, 2025, provided that eighty per cent of the export proceeds is brought into Pakistan in foreign exchange remitted from outside Pakistan through normal banking channels. According to some experts, If you are providing services locally, then you should get registered with PSEB, and there will be 3 years exemption for IT startups.

Q20. How can I become a tax consultant?
1) Study Income Tax and Sales Tax Laws. 2) Join any firm and learn tax filing under the supervision of experts. 3) Get yourself registered as ITP (Income Tax Professional). 4) Become a member of Tax Bar. 5) Practice under the supervision for 2 to 3 years to become an independent tax consultant.

Q21. My father transfers amount in my bank account and I also transfer amount to his bank account. How to show it in return of income and wealth statement?
In the case of father transferring to your account, ask him to prepare a gift deed and give it to you. Father will show it as a gift expense and you show this amount as an inflow under the head of gift in your wealth statement. There is no tax imposed on this transaction. The same applies to you if you transfer to your father’s account.

Q22. What is minimum tax?
Minimum tax needs to be paid whether company makes profit or loss. It is a minimum tax on revenue. Minimum tax on turnover is charged at a specified rate of the turnover if taxable income is less than that rate of turnover. Certain sectors have reduced rate of minimum tax. Minimum tax is applicable on all businesses that have turnover more than 10 Million.

Q23. I received the error message ‘Transaction not allowed, as another transaction has already been started / completed’?
It means that either you have the same task in the Draft or in the Completed Tasks. If the task is in Completed Tasks, then you cannot create a duplicate task. If the task is in Draft section, you may delete the draft to start anew. You should also check if you have received a notice for the same task in the Inbox. In that case, you should complete the task by opening the notice.

Q24. What is the difference between Inherited Property and Gifted Property?
Suppose your father transferred the property in your name in his life. You will mention this property as a gift in your wealth statement. If the father passed away, and you inherited the property as a legal heir by succession, it will be shown as Inheritance in the wealth statement. In the cases of both gift and inheritance, the property value will be shown as zero. It is because a property is declared at ‘cost of acquisition’. Since you did not pay anything at the time of acquiring the property, the value will be zero.

Q25. I submitted my return of income but I missed entering some information. How to revise it?
Iris also has an option of revising the return of income. Use that option. You can revise without approval within 60 days, after which you will have to seek approval.

Q26. My wife owns a property. Should I declare it in my wealth statement?
If the wife submits her return of income and wealth statement, then the property should be shown in wife’s wealth statement. If the wife does not file the tax return, the husband may show the property in his return.

Q27. My employer deducted my annual tax from my salary and gave me the salary/tax certificate at the end of the tax year. Where can I adjust this tax in Iris?
Enter the tax amount under the following head: Salary of Employees u/s 149 (Code: 64020004).

Q28. How do I declare property or car purchased through bank finance?
Show property or car as an asset and bank loan as long term liability. If car is obtained on lease, show it as asset and payable as ‘asset subject to finance lease’.

Q29. I have settled abroad, but still there are some savings certificates purchased on my name in Pakistan. Should I file the return of income?
File your return and select in attribute your residential status as non resident. If you do not file your return of income in Iris, the tax on your profit amount will be deducted at the rate of 20 or 30% instead of 10 or 15% because you will be treated as non-filer.

Q30. What is ATL?
ATL is the abbreviation of Active Taxpayers’ List. ATL for a year is published in the month of march of the next year. For example, if the tax year is 2020, the ATL published on March 01, 2021 will have the list of all taxpayers who filed their returns of income up to the tax year 2020. Active taxpayers get various benefits, e.g. reduced withholding taxes on bank profits, dividends, and purchase/sale of property. ATL is updated separately for Income Tax and Sales Tax.

Q31. I had some refund amount in my return of income last year. In which code, I can adjust this amount in the current year?
Adjust this amount under under Code 92101: Refund Adjustment of Other Year(s) against Demand of this Year.

Q32. I have purchased savings certificates such as Regular Income Certificate, Special Savings Certificate, Behbood Savings Certificates. Where will I mention the principal amount in Iris?
You will mention the certificates in the wealth statement under the Investment section. Certificates are your asset and not your income. The profits earned on these certificates will be your income for the corresponding tax year. The code in Iris is 7006: Investment (Non-Business) (Account / Annuity / Bond / Certificate / Debenture / Deposit / Fund / Instrument / Policy / Share / Stock / Unit, etc.).

Q33. I work as a visiting faculty in a university. Suppose I earned 100,000. The university will pay me 90,000 and deduct 10,000 as a tax on payment of services under section 153 of Income Tax Ordinance? How do I show it in my return of income?
You need to file the return of income for business individual and not salaried individual. Tax deducted under 153 (1) b is considered as final/minimum tax. There is a separate section in Iris named ‘Final / Fixed / Minimum / Average / Relevant / Reduced Tax’, which you should use to enter the tax amount. Also, in the Business tab, enter the amount under ‘fee for technical services’. In the wealth statement, mention teaching service in the attributes.

Q34. Can I adjust the withholding tax and refundable tax of previous years into the current tax year?
You cannot adjust the withholding tax of previous years into the current tax year. However, the amount of refundable tax can be adjusted into the current tax year for the past 6 years. Enter the amount under the following head: Code 92101: Refund Adjustment of Other Year(s) against Demand of this Year.

Q35. I am an overseas Pakistani. I have no source of income in Pakistan. However, I occasionally purchase properties in Pakistan. Should I file tax return in Pakistan or foreign return is goo enough?
You should also file your return of income in Pakistan. In the wealth statement, you will mention the properties under your name as your assets.

Q36. Are advance tax provisions applicable to incomes which are subjected to withholding tax?
If withholding tax is deducted on your incomes such as salary and bank profits, then your are not liable to pay advance tax. According to clause 147 (1) (d) of ITO, ‘every taxpayer other than income from which tax has been collected under Division II or deducted under Division III shall be liable to pay advance tax for the year’. Advance tax is usually applicable to companies.

Q37. I received some amount in my bank account as a gift. Is it exempted from tax?
According to section 39 of ITO, Income of every kind received by a person in a tax year, (if it is not included in any other head), other than income exempt from tax under this Ordinance, shall be chargeable to tax in that year under the head “Income from Other Sources”. This will include any amount or fair market value of any property received without consideration or received as gift, other than gift received from grandparents, parents, spouse, brother, sister, son or a daughter.

Q38. I have filed my return of income and wealth statement for the tax year. However, I did not attach any supporting documents with the return. Will it cause problems?
For individuals, no documents are required to be attached to the tax return.

Q39. Where should I show my gratuity amount?
Gratuity amount is exempted from tax. So, when you receive your gratuity amount, show it in exempt income. If it is receivable, you may show it in Other Assets.

Q40. I am not a filer. If I withdraw cash from the bank, how much tax will be deducted?
According to ITO 2001, section 231A: Every banking company shall deduct tax at the rate specified in Division VI of Part IV of the First Schedule, if the payment for cash withdrawal, or the sum total of the payments for cash withdrawal in a day, exceeds fifty thousand rupees. For removal of doubt, it is clarified that the said fifty thousand rupees shall be aggregate withdrawals from all the bank accounts in a single day.
The Rate of tax to be deducted under section 231A shall be 0.6% of the cash amount withdrawn, for the person whose name is not appearing in the active taxpayers’ list.

Q41. How much advance tax is deducted on educational fee?
According to Income Tax Ordinance 2001, section 236I: There shall be collected advance tax from a person not appearing on the active taxpayers’ list at the rate specified in Division XVI of Part-IV of the First Schedule on the amount of fee paid to an educational institution. The rate of collection of tax under section 236I shall be 5% of the amount of fee. Advance tax under this section shall not be collected from a person on an amount which is paid by way of scholarship or where annual fee does not exceed two hundred thousand rupees.

Q42. While declaring assets, how can I mention the amount of mutual funds?
Mutual funds are declared at cost value until you didn’t dispose off. When you have investments in mutual funds, declare the Investment cost in wealth statement, and profit earned during a given tax year as minimum tax u/s 7B.

Q43. I filed my return of income in previous year (for example tax year 2019) on time. However, I filed my return of income for the current year (for example tax year 2020) after the due date. What should I do to remain active in Active Taxpayers’ list?
Active Taxpayers’ list based on Tax Year 2020 will be published on March 01, 2021. Since you filed the return for previous year on time, your name will remain active in the taxpayers’ list up to February 28, 2021. On March 01, 2021, your name will be excluded in the taxpayers’ list. You will then have to pay surcharge of Rs. 1000 on March 01, 2021 to be included in Active Taxpayers’ List

Q44. Who is not required to furnish a return of income?
According to section 115 of ITO, the following persons shall not be required to furnish a return of income for a tax year; (a) A widow; (b) an orphan below the age of twenty-five years; (c) a disabled person; or (d) in the case of ownership of immovable property, a non-resident person.

Q45. Where can I show the amount earned as commission?
According to section 233 of ITO, the principal shall deduct advance tax at the rate specified in Division II of Part IV of the First Schedule from such payment. Different rates are mentioned in the table such as 8%, 10%, and 12%. You should make the entry as follows :Enter commission amount in Brokerage / commission u/s 233 @ xx% Receipts Value. Enter tax amount in Tax Collected / Deducted. Under the Business tab, select Other Revenues. In the row ‘Others’, enter the commission amount in Total Amount and Amount Exempted Subject to Final Tax. You will have these options in Normal Return (Ind/AOP/COY) but not in Salary Return for Individuals – Classic View.

Q46. Where can I show the winning amount of prize bond?
Under Final/Fixed/Minimum/Average/Relevant/Reduced Tax, there is an option ‘Prize on Prize Bond u/s 156’. Enter the winning amount in Receipt/Value and tax amount in Tax Collected/Deducted.

Q47. Who is a salaried individual?
When the income of an individual chargeable under the head ‘salary’ exceeds seventy-five per cent of his taxable income, the person is considered as a salaried individual (ITO, First Schedule, Part I, Division I). The employer of a salaried individual should have an NTN number so that the employer could be selected under the Link tab of Registration Form.

Q48. Who is a resident individual?
An individual shall be a resident individual for a tax year if the individual is present in Pakistan for a period of, or periods amounting in aggregate to, 183 days or more in the tax year. There are also clauses b and c mentioned in section 82 of ITO.

Q49. Is tax paid on air tickets adjustable?
Tax paid on air tickets is adjustable only if If you purchase International air ticket and travel in business class (ITO, Section 236L).

Q50. Is profit received on Behbood Savings Certificates taxable?
Profit received on Behbood Savings Certificates is treated as your taxable income. Withholding tax is not deducted on the profit. However, the profit amount is added in your overall taxable income. If the taxable income exceeds 400,000, the tax will be charged as per the tax slab.

Q51. A car was purchased in Rs. 600,000 and sold at Rs. 800,000. Is this gain on asset taxable?
If you declared the car as personal asset (not the business asset), then gain on sale of personal asset is not taxable, and gain will be shown in wealth statement inflows. The relevant head is ‘Gain on Disposal of Assets, excluding Capital Gain on Immovable Property’. If you declared the car as the business asset, then this income is subject to tax under section income from business. You should also consider that vehicles get depreciation in accounting law.

Q52. What is the tax reduction for full time teachers/researchers?
According to Second Schedule, Part III, Section 2, the tax payable by a full time teacher or a researcher, employed in a non profit education or research institution duly recognized by Higher Education Commission, a Board of Education or a University recognized by the Higher Education Commission, including government research institution, shall be reduced by an amount equal to 25% of tax payable on his income from salary.

Q53. How long am I permitted to revise revise my return of income and wealth statement?
For return of income, revision can be done within 5 years. For this purpose an application should be filed in Iris. For wealth statement, revision can be made at any time without application.

Q54. Is income from property taxable?
Yes. Income from property, property rent, rental income is taxable. The tax applies when the annual income from property exceeds 200,000. Tax rates for Income from Property for Individuals and AOP are mentioned in First Schedule, Part I, Division VIA.

Q55. How much foreign remittance is exempted from tax?
According to section 111(1) of ITO, unexplained income or assets shall be included in the person’s income chargeable to tax. However, according to section 111(4), sub-section (1) does not apply to any amount of foreign exchange remitted from outside Pakistan through normal banking channels (not exceeding five million rupees in a tax year) that is encashed into rupees by a scheduled bank and a certificate from such bank is produced to that effect.

Q56. Where can I find purpose codes for the classification of foreign remittance?
Purpose codes for the classification of foreign remittance can be accessed at this link: https://www.sbp.org.pk/stats/2018/CL-04.pdf

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