Pensioner Challenges FBR Over Incorrect Tax Status
A senior taxpayer relying on income from a Behbood certificate has lodged a formal grievance with the Federal Tax Ombudsman (FTO), disputing the Federal Board of Revenue’s (FBR) classification of him as an ‘In-Active’ taxpayer. This status was assigned on November 1, 2026, despite his pending objections concerning a tax miscalculation and an applied extension request.
Details of the Tax Dispute
The complaint, filed by Waheed Shahzad Butt, Chair of the LTBA Public Interest Litigation Committee, represents the interests of pensioners like A.H. Butt and others holding Behbood Savings Certificates and Shuhada Family Welfare accounts. According to Pakistan’s Income Tax Ordinance, 2001, the profit tax on Behbood certificates should not surpass 5 percent. However, the IRIS tax return system is reported to have incorrectly applied a 10 percent surcharge to the full unreduced tax amount.
In a detailed example, normal tax was calculated at Rs. 4,241,199 with the legal reduction of Rs. 796,132 applied. Nonetheless, the system imposed a surcharge of Rs. 424,120 rather than Rs. 344,507, leading to an overcharge of Rs. 79,613. When computed correctly, the resulting tax obligation should total zero.
Consequences and Legal Concerns
Despite notifying the FBR chairman and copying the FTO about this miscalculation on October 24, 2026, and requesting an extension before the October 31 deadline, no response was received. Subsequently, the taxpayer’s status was changed without formal hearing or explanation, which the complaint cites as arbitrary and in violation of constitutional rights.
The complaint highlights that the law’s surcharge provision applies only to standard tax amounts, not those already reduced under specific clauses, and emphasizes the unfairness of punishing taxpayers for software faults originating from FBR’s systems.
Being removed from the Active Taxpayers List (ATL) subjects affected pensioners to heightened withholding taxes, bank and property transaction restrictions, and penalties for late filing. The issue is systemic, impacting a considerable number of taxpayers with similar income sources exceeding Rs. 10 million.
Why This Matter for Pakistan
Given the nation’s increasing reliance on digital tax systems like IRIS, inaccuracies in tax computations undermine taxpayers’ confidence and raise questions about the fairness of automated assessments. Pensioners and individuals dependent on statutory savings instruments are particularly vulnerable, as erroneous statuses can impose financial and legal hardships unjustly.
Resolving this matter promptly is crucial to uphold taxpayer rights and ensure the reliability of tax administration. The complaint calls for immediate restoration of active status, correction of tax software logic, issuance of specific rulings, and accountability for administrative delays.
A spokesperson representing the complainants said, “No citizen should face penalties due to government software errors, and we seek corrective measures to protect the rights of all affected pensioners.” The FTO has been approached to investigate and direct corrective action accordingly.
