ISLAMABAD: The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to operationalise the relevant clause of the Income Tax Ordinance, 2001, by incorporating a dedicated tax code/tax/field in the IRIS return format to enable eligible women entrepreneurs to avail the facility of a 25 percent reduction in the tax liability.
According to an order issued by the FTO on Monday, the subject complaint has been filed under Section 10(1) of the Federal Tax Ombudsman, Ordinance, 2000 (FTO Ordinance) against the failure of the FBR to operationalize the provisions of clause 19, Part-Ill of the Second Schedule to the Income Tax Ordinance, 2001, in the IRIS return filing system, which states as under:
“The tax payable by women enterprises on profits and gains derived from business chargeable to tax under the head “Income from Business” shall be reduced by 25 percent.
Explanation: For this clause, a woman enterprise, or a startup established on or after first day of July 2021 as sole proprietorship concern owned by a woman or an AOP all of whose members are women or a company whose 100 percent shareholding is held or owned by women: Provided that benefit of this clause shall not be available to a business that is formed by the transfer or reconstitution or reconstruction or splitting up of an existing business.”
The complaint was referred to the Secretary of the Revenue Division for departmental reply/comments.
It has been found that the FBR has failed in incorporating the necessary mechanism in the IRIS Information Technology & return formats, thereby depriving Digital Transformation, the FBR’s eligible taxpayers of benefits headquartered in Islamabad, as envisaged under the law.
The non-implementation of Clause 19 undermines the legislative intent to incentivize, imposes unjustified financial burdens upon eligible taxpayers, discourages voluntary compliance, and erodes public confidence in the tax system.
That the respondent’s inaction squarely constitutes maladministration under Section 2(3)(i) of the FTO Ordinance, 2000, being contrary to law and statutory duty; marked by neglect, delay, and inaction, and discriminatory in effect, depriving women enterprises of lawful entitlements, FTO said.
The omission further violates constitutional guarantees, including Article 4, Article 8, Article 9, Article 18, and Article 25.
The respondent’s failure also undermines constitutional and policy commitments towards gender equality, financial inclusion, and women’s economic empowerment, repeatedly emphasized in the Prime Minister’s vision 2025, the Strategic Trade Policy Framework, the FTO order said.
The complainant stated that the tab of reduction in 25 percent tax liability for women entrepreneurs as per clause 19 of Part-Ill of the 2 Schedule to the Income Tax Ordinance, 2001, inserted through the Finance Act, 2021, has not been activated as yet, which is causing severe hardships to the businesswomen of the country.
The DIR stated that in order to incorporate necessary changes in the IRIS tab, the matter has been taken up with the FBR and a letter has been sent to the DG (IT & DT) for necessary action.
The complainant and the DIR heard and recorded, and perused. The plea of the complainant regarding the insertion of Clause 19 in the Part-Ill of the 2nd Schedule to the Income Tax Ordinance, 2001, through the Finance Act, 2021, and not extending the benefit of a 25 percent tax rebate to the women entrepreneurs since 2021 by the FBR clearly exhibits inefficiency, incompetence, and ineptitude in the discharge of official duties & responsibilities and squarely falls under the category of “Maladministration” under the provisions of Section 2(3)(ii) of the FTO Ordinance, 2000.
FTO has directed FBR to operationalize Clause 19 of Part-Ill of 2nd Schedule of the Income Tax Ordinance, 2001 by incorporating a dedicated tax code/tax/field in the IRIS return format to enable eligible women entrepreneurs to avail the facility of the 25 percent reduction in the tax liability; and report compliance within 30 days, the FTO added.
Copyright Business Recorder, 2025
