LAHORE: The Federal Tax Ombudsman (FTO) has criticised the Federal Board of Revenue (FBR) for failing to operationalise a legal tax relief for women-owned enterprises in its IRIS return filing system, saying the delay has deprived eligible businesses of a benefit provided under the law.
According to the FTO Annual Report 2025, the complaint was filed under Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000, against the FBR’s failure to implement Clause 19, Part-III of the Second Schedule to the Income Tax Ordinance, 2001.
The provision was introduced through the Finance Act, 2021 and allows a 25% reduction in tax payable on profits and gains from business by eligible women enterprises.
Under the law, a women enterprise means a startup established on or after July 1, 2021, operating as a sole proprietorship owned by a woman, an association of persons in which all members are women, or a company whose entire shareholding is held by women.
The tax benefit does not apply where a business has been created through the transfer, reconstitution, reconstruction or splitting of an existing business.
Tax relief remained unavailable through IRIS
The complainant, an Advocate of the High Court and registered taxpayer, argued that despite the clear legislative provision and more than four years having passed since its introduction, the FBR had failed to incorporate the concession into the IRIS system.
The complainant maintained that the omission deprived eligible women entrepreneurs of the 25% tax reduction guaranteed under the law.
It was further argued that the failure undermined the government’s policy of promoting women’s economic empowerment, discouraged voluntary tax compliance and amounted to maladministration under the FTO Ordinance.
The matter was referred to the Secretary, Revenue Division for comments under Section 10(4) of the FTO Ordinance read with Section 9(1) of the Federal Ombudsmen Institutional Reforms Act, 2013.
The Chief Commissioner-IR, Regional Tax Office (RTO) Peshawar, acknowledged the legal existence of Clause 19 but maintained that the RTO had not committed any act of omission or commission amounting to maladministration.
FBR acknowledges technical implementation delay
The FTO report noted that FBR Circular No. 2 of 2021-22, issued on July 15, 2021, had reaffirmed the applicability of Clause 19 and recognised the entitlement of eligible women enterprises to the 25% tax reduction.
However, the technical integration of the provision into the IRIS return filing module remained pending.
The Chief Commissioner also informed the FTO that a letter dated September 24, 2025, had been sent to the Director General (IT & DT), FBR, requesting activation of a dedicated field in the IRIS system to implement the provision.
The communication warned that failure to operationalise the facility before the statutory return filing deadline of September 30, 2025, could deprive thousands of women-owned enterprises of their lawful tax benefit.
FTO declares FBR inaction maladministration
After examining the record and hearing both sides, the FTO observed that the insertion of Clause 19 through the Finance Act, 2021 clearly demonstrated the legislature’s intention to provide fiscal relief to women-led businesses as part of broader economic inclusion policies.
The Ombudsman held that the FBR’s failure to operationalise the provision in its online filing system, despite the passage of considerable time and repeated requests, reflected administrative inefficiency and neglect.
The FTO determined that the inaction constituted maladministration under Section 2(3)(ii) of the Federal Tax Ombudsman Ordinance, 2000, as it demonstrated inefficiency, ineptitude and a lack of responsiveness in the performance of statutory duties.
According to the findings, the omission not only frustrated the legislative intent behind the tax concession but also undermined the government’s commitments to gender equality and the economic empowerment of women entrepreneurs.
FTO directs FBR to activate tax code
The FTO consequently recommended that the FBR operationalise Clause 19 by incorporating a dedicated tax code into the IRIS return filing system.
The measure would enable eligible women-owned enterprises to claim the 25% reduction in their tax liability as provided under the Income Tax Ordinance, 2001.
The decision highlights the importance of ensuring that statutory tax concessions are fully integrated into digital filing systems so that eligible taxpayers can access benefits granted to them under the law.
