Federal Board of

Revenue
GROUP 4
 Federal Board of Revenue

 Federal Board of Revenue is responsible for auditing,

enforcing and collecting revenue for the government
of Pakistan.

FBR has the following set of responsibilities:

 Formulation and administration of fiscal policies
 Levy and collection of federal taxes
 Quasi-judicial function of hearing of appeals
 History

 1924: Central Board of Revenue (CBR)

 1944: Revenue Division created under the Ministry of Finance
 1960: CBR was made an attached department of the Ministry
of Finance
 1974: Further changes were made to streamline the
organization and its functions [Post of chairman CBR was
created]
 1991: Status of CBR as a revenue division was restored under
the Ministry of Finance
 1995: Revenue Division abolished in 1995 and CBR reverted
back to the pre-1991 position
 2007: CBR has now become FBR [Federal Board of Revenue]
 FBR – Revenue Division

FBR
(Revenue Division)

Inland Revenue Service Pakistan Customs Service

(Customs Wing)

Income Tax Sales Tax Excise Duty

Role of IRIS
 Some Stats

 117,000 taxpayers have submitted their income

tax returns through e-filing compare to last year
(52% Increase).
 1,800 to 1,900 people get themselves registered
through e-FBR monthly.
 Active Filers in 2015: 958,741
 70% of the revenue budget is collected through
Inland Revenue.
 Tax Payers (Entities)

 Users
 Company

 FTN

 Salaried Individuals

 Non Salaried Individuals

 AOP (Association of Person)

Manual Process
 Automation

 E-CBR

 E-FBR
 Integrated Risk Information System (IRIS)

 An e-return filing platform.

 A web-based portal launched by PRAL (Pakistan
Revenue Automation Pvt Limited) a year ago in
accordance with the policies of the FBR.
 Initially system was designed for the filing of income
tax returns only
 Recently, the FBR shifted all functions from e-fbr to
IRIS.
 IRIS specifically covers these business processes
 Income Tax Return
 Sales Tax Return
 E-FBR vs IRIS

E-FBR IRIS
 Recoded the rules  Configurable
 Non flexible  Flexible
 Scalable
 Non scalable
 Open source technology
 Relaxation in law
Oracle data center (good
(garbage data) match)
 High purchase cost of  According to FBR law
licenses (my SQL ,  Implication of all law
etc.). (very large domain,
encompasses everything)
 Business Process Re-engineering

 Manual
 Process Diagram

 Auto
 Process Diagram of E-FBR

 Process Diagram of IRIS

 Modules of IRIS

 REGISTARTION Module
 Taxpayer Registration
 Change in Particulars
 Enrollment for availing e-Services
 (i.e. Obtaining User-Id, Password and PIN)

 Application of enrollment as e-Intermediary

 INCOME TAX RETURNS Module
 Income Tax return
 Income tax withholding statements
 Return of Aircraft/ ship Owner
 Time extension request for filling return
 Modules of IRIS (Cont.)

 Withholding Tax Module

 SALES TAX Module

 Sales Tax return
 withholding statements.

 TAX PAYMENTS & REFUNDS Module

 Income tax
 Sales Tax
 Federal Excise Duty
 Sales Tax Refund Application
 Income Tax Refund Application
 KPIs

 Traffic
 Time on site
 Conversion Rate / Leads per day/month
 No of Subscribers
 Task Completion Rate
 Page load time
 Downloads (Download of forms and handbook etc)
 Returning visitors
 Problems in System

 Names of tax payers do not appear in the Tax Payer

Directory
 It stops working
 Access to the data is denied without any reason
 System slow down as it was overloaded
 Difficulties for a foreign company with PE in
Pakistan to get NTN are huge
 At present to get an NTN, a foreign company without PE in
Pakistan needs to have at least two directors who have NTN
and a local telephone number and address.
 Problems in System

 It takes a very long time to upload data from Excel

Sheet
 as a result of which the session gets timed out resulting in
failure of the part of the withholding agent to upload the data.
 In IRIS system, every employee must have NTN in
order to file details of tax withheld from such person
 Previous system of e-portal, taxpayers were allowed
to file separate statements of salary and other than
salary. IRIS program does not have such feature
 Taxpayers are denied the right of getting speedy
refunds by filing tax through IRIS
 Problems in System

 No option of bringing forward last year’s credit

 No option of realizing advance tax
 Receipt system stops working
 GAP Analysis / Reasons of System’s Failure

 Capacity Issues
 Vague focus (w.r.t mission statement) not communicating with users
 No acceptance.
 PRAL didn’t test this system thoroughly before making it
operational due to time constraint
 Numerous changes were made after the platform was
deployed and these changes were never listed out
 Some businessmen started propaganda against the
software
 Failure of system due to sudden submission of
millions of tax returns and system become slow and
overloaded
 GAP Analysis / Reasons of System’s Failure

 Communication GAP
 FBR and PRAL have a very weak system for commissioning,
developing, testing and deploying systems, devoid of a
strategic vision, devoid of a service level agreement
 System is unfriendly and encouraging malpractices
instead of facilitating taxpayers
 ill-trained manpower deployed to run the system is
said to worsen the filers’ troubles.
 Return forms aren’t available round the year for the
convenience of the taxpayers
 Lot of system’s dependency on external sources
 GAP Analysis / Reasons of System’s Failure

 The government has decided to receive only online

returns from income-tax payers, without
considering the inefficiency within the FBR’s e-filing
Iris system.
 Not fully compliance with law
 Government decided in the 2015-16 budget that taxpayers’
CNIC numbers will be used as tax identifiers instead of their
NTNs but IRIS is not compatible with this decision.
 Withholding tax rates were increased for non-filers and a 0.3%
withholding tax was introduced on their banking transactions
that exceeded Rs50,000 a day.
 Launched the system in the last days when taxpayers
are required to file their returns.
 Risk Management

 Compliance with tax laws

 Business operations
 Security Breaches
 Financial institutions conduct audit of enterprises
based on financing amounts and bank assessment of
company’s risk.
 Challenges

 Processes
 Less use of e-FBR by tax filers

 Absence of adequate tax culture in the country

 Enforcement Problems
 Development of electronic commerce and related
improvements has made the task of collection of taxes from
non-residents a difficult proposition
 Accounting Problems
 Documentation needs to be improved for having correct
information about taxpayers
 Operational Problems
 Tax challans provided by SBP/NBP contain problems such as:-
 a. Bank branches do not send Computerised Payment Receipts
 b. In most of the cases, names of “payee” and payer / deducting
authority are either not entered as the same on the CPR or are not
entered in the appropriate column.
 c. Type of payment is missing or wrongly entered.
 i. In case of wrong NTN, the Database accesses wrong information.
Therefore, CPR does not represent taxpayer’s correct information.
 Opportunities

 Development of new techniques to correctly estimate taxes of

online business(e-commerce) with no physical presence.
 Coordination with other Departments
 Organized and concerted efforts for coordination with these
other departments can fairly enhance collection out of
withholding taxes.
 It would also serve as deterrence against tax evasion in
future.

 The Board of Investment o Sales Tax Department

 Provincial Excise Authorities o State Bank
 Registrar of Properties o Customs Department
 Management Strategies

 The Department should promote the use of NTN

only as common identification
 Developing the Database
 Although it is mandatory to e-file the with-holding tax
statements but are filed manually by a large number of
Withholding Agents due to lack of enforcement by the field
formations.
 In the absence of full-fledged data base, the available
information cannot be used for any policy planning or other
research purposes
 A software application is being developed to monitor
trends/performance of various sectors of the economy
represented by Withholding Taxes Agents
 For FBR, withholding taxes are major source of
information
 Re-engineering of withholding tax processes and
automation for purposes of effective monitoring
needs to be done
 Suggestions

 Changes/ modifications relating to IRIS should be

publicized
 It is suggested that instead of NTN, CNlC’s should be
accepted as valid identity for filing data
 FBR should launch training for filing statements through
IRIS system
 people also be given the option to file their returns
manually until the e-filing system has improved and
become user- friendly.
 We have suggested that the government introduce a one-
page return form in Urdu
 There should be fix date for filing income tax return and
there should be a penalty of filing return late
 Suggestions

 Enhance system usability

 Add exemption features in the system
 Allow taxpayers to submit multiple files
 Collect taxes on phases (Divide filing dates according
to defined categories)
 Improve CRM
 Video Tutorial