Audit under USAS: list compiled for selection of returns

The Central Board of Revenue (CBR) has compiled a list of 7,500 companies, businessmen and traders for selection of returns for audit under the Universal Self-Assessment Scheme (USAS). Official sources told Business Recorder on Monday that audit of corporate sector pertaining to tax year 2004 would be selected on the basis of criteria laid down by the CBR. The list revealed that the CBR has given special code number to each company whereas National Tax Number (NTN) and business addresses have been retrieved from tax returns.
Under section 177 of the Income Tax Ordinance 2001, the CBR is empowered to lay down criteria for selection of audit cases on the basis of taxpayers' balance sheet/record with the department and convey the same to the commissioner for selection of audit cases.
Initially, CBR's computer wing after scrutinising the data of corporate returns detected discrepancies and tax authorities have compiled 45 queries to unearth flaws in the corporate returns.
The queries have been drafted as per provisions in the Ordinance 2001. The queries were fed into the CBR database on tax returns and subsequently the authority got a list of returns in which discrepancy is found.
Only high-risk corporate cases involving huge revenue would be investigated by commissioners.
Last year, a total number of 547,613 business returns were filed by corporate and non-corporate taxpayers and only 24,020 cases were selected for audit for tax year 2003. Cases so selected constitute only 4 percent of the total number of business returns. Giving example of query, officials said computer automatically generated list of persons, who have not identified the tax payment in returns. There are cases where same companies have been repeatedly identified on different queries. But, the idea is to only conduct audit of cases where revenue risk is involved.
It was agreed in principle that the CBR will select a very small percentage of returns of tax year 2004 for audit. The policy of meager selection of cases would be kept in mind while picking companies from the said list.