The Federal Tax Ombudsman (FTO) has taken serious notice of delays by the Federal Board of Revenue (FBR) in processing taxpayers’ extension applications for income tax returns. In an important development, the FTO has given the FBR exactly three days to clear all pending requests and ensure that taxpayers are informed on time. This move aims to protect taxpayers’ rights, improve transparency, and restore trust in the tax administration system of Pakistan.

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This detailed article explains the full situation, why the FTO intervened, how taxpayers were affected, what action the FBR now must take, and how this decision may shape future tax filing processes in Pakistan.

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Why FTO Issued a 3-Day Deadline to the FBR

The FTO issued its order after receiving complaints from taxpayers who filed extension requests for their Tax Year 2025 income tax returns through the IRIS portal but never received timely approvals. According to the FTO order, these delays fall under “maladministration” as defined in Section 2(3)(ii) of the FTO Ordinance, 2000.

The FTO stated that:

• Many applications remained pending for weeks
• Some taxpayers received approval after the deadline had already passed, making the extension useless
• FBR’s system did not notify applicants despite timely submission
• Taxpayers suffered hardship and procedural injustice

This situation created uncertainty and a sense of unfairness among taxpayers.

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What the FTO’s Order Says

The FTO has clearly directed:

✔ FBR must clear all pending extension applications within 3 days

All commissioners in field formations must immediately decide all pending requests.

✔ FBR must provide reasonable time to taxpayers

Those notified after the extended deadline must be given additional days.

✔ Member IR (Operations) must supervise compliance

The FTO instructed FBR’s senior leadership to ensure strict implementation.

✔ Delay is unacceptable and considered maladministration

Not informing taxpayers on time violates fair administrative practices and their legal rights.

Why the Complaint Was Filed

The main complaint came from taxpayers and tax consultants who argued:

• They applied for extensions on time using IRIS
• Applications remained stuck in the IRIS Outbox
• No approvals or rejections were issued
• Deadlines passed while applications were still pending
• Taxpayers were later informed two days after expiry of the extended date

This resulted in fear of penalties, notices, and non-compliance — even though the taxpayers followed the rules properly.

How Serious Is the Issue?

The FTO categorized this matter as:

• Administrative negligence
• Failure of the system
• Violation of taxpayer rights
• Lack of transparency

These delays also affect Pakistan’s broader tax compliance culture. When taxpayers follow rules but the state fails to respond properly, it damages confidence in the tax authority.

Major Problems Faced by Taxpayers

1. Stress and confusion during return season

Taxpayers were unsure if their returns would be considered late.

2. Fear of penalties

Even though they applied on time, delays placed them at risk of:

• Late filing penalties
• Audit selection
• Notices from FBR

3. Loss of trust in IRIS system

Taxpayers complained that the IRIS portal is unstable, slow, and unreliable during peak seasons.

4. No communication from FBR

The FBR failed to notify taxpayers whether their request was accepted or rejected.

5. Negative impact on businesses

Corporate taxpayers and small businesses depend on timely filing to avoid financial complications.

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FBR’s Response After FTO Intervention

According to the FTO order, the FBR only began disposing of pending applications after FTO stepped in. However, even then, approvals were issued two days after the extended date — making them practically useless.

The intervention highlighted the need for:

• Better digital systems
• Real-time notifications
• Improved internal coordination
• Faster decision-making during tax season

Legal Background: What the Law Says

Income Tax Ordinance, 2001

The law allows taxpayers to apply for extensions. FBR must:

• Process applications promptly
• Notify taxpayers with a reasonable extension
• Ensure transparency in communication

FTO Ordinance, 2000

FTO can intervene when:

• There is maladministration
• Tax laws are unfairly implemented
• Public complaints are ignored

In this case, FTO found strong evidence of negligence.

Impact of FTO’s Decision on Future Tax Filing

This ruling will likely:

1. Improve Taxpayer Rights

Taxpayers may receive more respectful, timely, and transparent treatment.

2. Force IRIS System Improvements

FBR will be under pressure to upgrade:

• Portal performance
• Notification system
• Data processing speed

3. Reduce Maladministration

Commissioners must process applications faster to avoid FTO penalties.

4. Build trust

People will trust that their extensions are properly handled.

5. Encourage compliance

When processes work smoothly, more people voluntarily file returns.

Why Extension Requests Are Increasing Each Year

Taxpayers often need extensions due to:

• Delayed financial statements
• Slow IRIS portal performance
• Technical glitches
• Taxpayer representatives managing large volumes
• Lack of awareness
• Peak-season traffic on the server

These challenges make timely processing extremely important.

FBR’s Digital Challenges

The incident exposes major flaws:

✔ IRIS system delays

Extensions stuck for weeks indicate server inefficiency.

✔ Lack of automation

Approvals should be automated but rely heavily on manual processing.

✔ No SMS or email alerts

Taxpayers should receive instant notifications.

✔ Outdated infrastructure

Peak load affects performance every year.

What Tax Consultants Are Saying

Tax consultants across Pakistan welcomed the FTO’s decision. They highlighted:

• The delay caused unnecessary panic
• Many taxpayers were at risk of penalties
• The IRIS portal must be modernized
• Extension approvals should be automatic when filed within deadlines
• FBR must make taxpayer convenience a priority

What Taxpayers Should Do Now

✔ Check IRIS for updates

Approved extension notices may already be available.

✔ Save screenshots of extension submission

This can protect you against penalties.

✔ File returns as soon as possible

Do not wait for another extension.

✔ Keep digital and physical records

Useful if a dispute arises.

✔ Monitor FBR announcements

More instructions may follow after the FTO order.

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Will There Be a Penalty Waiver?

Although the FTO did not explicitly order a penalty waiver, taxpayers who:

• Applied on time
• Did not receive approval
• Were notified after the deadline

…may be eligible for relief.

FBR may issue instructions soon.

Conclusion About FTO Gives FBR 3 Days to Clear Extension Requests:

The FTO’s decision to give the FBR three days to clear all pending extension requests is a major step toward protecting taxpayer rights and improving governance. The issue highlighted serious problems in the IRIS system, delayed approvals, lack of transparency, and administrative inefficiency.

This intervention will push FBR to modernize its systems, communicate clearly with taxpayers, and ensure fair implementation of tax laws. If implemented effectively, this decision could help rebuild trust between Pakistani taxpayers and the tax authority.

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