Karachi Tax Bar urges FBR to fix wealth statement filing issue for returning residents

The Karachi Tax Bar Association (KTBA) has urged the Federal Board of Revenue (FBR) to remove a restriction in its IRIS tax-filing system that prevents individuals returning to Pakistan after a period of non-residence from entering the correct opening wealth balance for tax year 2026.

In a letter to Zubair Bilal, FBR member for Inland Revenue Operations, the association said the portal automatically carries forward the wealth balance from the last statement filed, without allowing taxpayers to edit the figure.

The restriction creates difficulties for individuals who were non-residents during intervening tax years and were not required to file wealth statements, but subsequently returned to Pakistan and regained resident status, the association said.

Why are returning residents facing tax-filing difficulties?

The IRIS system automatically uses the closing wealth balance from a taxpayer's last filed statement as the opening balance for tax year 2026. According to the Karachi Tax Bar Association, returning residents cannot correct that figure to account for years spent abroad, making it difficult to reconcile their assets accurately.

Under Section 116(2) of the Income Tax Ordinance, 2001, resident individuals filing income tax returns are required to submit wealth statements and wealth reconciliation statements for the relevant tax year.

The association illustrated the problem with an individual who was a Pakistani resident through tax year 2023, which ended on June 30, 2023, but became a non-resident for tax years 2024 and 2025.

During those years, the individual declared only Pakistan-source income and did not file wealth statements.

After returning to Pakistan and becoming a resident again in tax year 2026, the individual was required to submit wealth and wealth reconciliation statements.

However, IRIS continued to display the closing wealth balance from June 30, 2023, as the opening balance, without allowing the taxpayer to enter an updated figure.

The association said this made it difficult to reconcile changes in wealth for tax year 2026 without accounting for the intervening years of non-residence.

Tax Bar seeks changes to IRIS 2.0

The association urged the FBR to modify the validation mechanism in IRIS 2.0 to allow returning residents to enter an appropriate opening wealth balance.

It said the change would enable affected taxpayers to complete their filings without preparing reconciliations spanning years in which they were not required to submit wealth statements.

The KTBA also argued that taxpayers should be allowed to declare opening wealth balances based on relevant information and records, subject to applicable tax laws.

According to the association, the system should facilitate compliance with Section 116(2) without extending the scope of the statutory obligation.

It called for an urgent resolution to allow affected individuals to submit their tax year 2026 wealth statements and reconciliations correctly.