KARACHI: The Federal Board of Revenue has (FBR) has notified draft procedures for selection of conduct of income tax audit.
According to the proposed amendments in the Income Tax Rules, for each tax year cases for audit will be selected in accordance with the predetermined percentage, to be publicized through FBR’s web-portal, and immediately after computer ballot, the lists of selected case will placed on FBR’s web-portal.
The whole balloting system for audit selection will be based only on the NTNs/CNICs of the filers and the cases selected for audit will be communicated to concerned RTOs and LTUs as per their respective jurisdictions.
As far as selection of cases on parametric basis is concerned, these may be based upon financial ratios for the year viz a viz the history of the case; financial ratios viz a viz industrial, sectoral or national ratios; industrial comparisons or bench marks; quantum of losses or refunds beyond certain thresholds; compliance history.
In both categories of selection for audit shall be held in the presence of representatives from Chambers of Commerce and Industries and representatives of Tax Bar Associations.
The taxpayers to be audited are bound to provide prescribed books of accounts; support information and documents; access to computerized data or provision of attested hard copies of computerized data.
Board has the authority to exclude any person or classes of person from audit selection. However, such exclusions will be publicized on FBR’s web portal prior to the process of balloting or selection.
On completion of examination of books of accounts, the discrepancies, if found, will be intimated to the taxpayer for obtaining taxpayers’ explanation, in the form of audit report, seeking taxpayer’s explanation on these points.
Explanations of the taxpayer, where found not acceptable, shall be intimated to the taxpayer, through a notice about the amendment in assessment along with the rationale.