The Federal Tax Ombudsman (FTO), Dr. Asif Jah, has issued a directive to the Federal Board of Revenue (FBR) for the refund of excess income tax to taxpayers affected by incorrect calculations in the new income tax return for Tax Year 2023. This landmark order follows a public interest complaint lodged by tax lawyer Waheed Shahzad Butt, highlighting discrepancies in income tax calculations for pensioners, senior citizens, and Shuhada families.

According to sources, the FTO’s order is based on the acknowledgment by the FBR that the income tax return for Tax Year 2023 contains incorrect tax liabilities for pensioners, senior citizens, and members of Shuhada families.

The FTO order reveals that comments were sought from key FBR representatives, including the Secretary Revenue Division, Member (Policy), and Member (Information & Technology). The FBR’s admission of a calculation mistake in IRIS was presented during the hearing. However, the department failed to determine the excess amount paid by taxpayers due to the miscalculation and did not initiate the refund process.

Tax lawyer Waheed Shahzad Butt emphasized that the FBR should prioritize the refund of wrongly paid or collected tax without causing harassment to taxpayers. He criticized the FBR Policy Wing for its ineffective handling of the tax reduction issue on yields from Behbood/Pensioner/Shuhada Family Welfare Account under Code “930101” in the income tax return for Tax Year 2023.

Butt urged Member Policy to apologize to pensioners, senior citizens, and Shuhada families for professional negligence and ensure the prompt return of illegally collected extra tax through the faulty tax return.

The FTO order instructs the FBR to direct Member (Information & Technology) to identify cases where excess tax has been paid due to calculation errors in Iris. The order mandates the refund of any excess amount to affected taxpayers within 45 days, addressing the concerns raised by the public interest complaint and ensuring a fair resolution to the issue.