The Federal Board of Revenue (FBR) has decided to conduct income tax audit of withholding agents for which criteria would be devised under the national audit plan. Sources told Business Recorder on Thursday that the audit would cover all categories of withholding agents.
There are many agents, who are not regularly filing statements nor deducting the due taxes. Within the corporate sector, the focus of audit would be withholding agents across the country. In this connection, computerised criteria would be devised for effective audit of such agents under the audit guidelines and audit plan.
This is for the first time that the FBR intend to conduct audit of withholding agents, as it included government projects, corporations, organisations and others, sources added.
It is worth mentioning that the board had declared 2,300 public sector development projects as withholding agents, for collection of withholding tax from this major non-compliant area under various provisions of the Income Tax Ordinance 2001.
Withholding agents/authorised persons to collect/deduct tax at time of making payment included person defined as company ie companies public/private/corporations)/co-operative societies, registered trusts and other taxable categories and entities; Association of Persons (AOPs) registered under any law (includes trusts and NPOs, etc, not registered as company); Non-profit Organisations registered under the relevant laws, like charitable entities; employers, irrespective of their status, who pay taxable salaries and are obliged to deduct tax from payment of salary to their employees; federal and provincial governments organisations in local authorities, departments and district governments.
Other categories of withholding agents covers exempt entities - trusts, non-profit organisations; international agencies, non-resident entities and diplomatic missions, etc; persons required to deduct tax from payments of salary to non-residents, etc; non-residents, liaison offices, trade offices, branches and agents, etc, required to deduct tax while making payments; any other category required as per law to deduct/collect tax under the withholding tax regime and project directors of various kinds, including development projects of federal/provincial governments.
The board had identified five key areas for improving withholding tax collection. The areas are withholding tax on salary paid to government, semi-government and private sector; withholding tax on rental income; withholding tax on imports; deduction of tax from interest on bank deposits and deduction of taxes from payments to non-residents.
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