The Federal Board of Revenue (FBR) Member Inland Revenue Khawar Khurshid Butt said on Monday that the FBR has given July 31, 2011 deadline to the Chief Commissioners of Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) to ensure completion of post-refund audit (PRA) of sales tax refunds paid under the Expeditious Refund System (ERS), a crucial component of e-refund system.
Talking to a group of journalists, the FBR Member IR said that PRA of the refund paid electronically is necessary to check any misuse of the facility under the new system. Without PRA and verification of export records, it would not be possible to check misuse of the electronic system, if any. The FBR has issued instructions to Pakistan Revenue Automation Limited (PRAL) to ensure availability of data of the expeditious refund to the audit teams of the RTOs for timely completion of the job.
Under the plan to conduct PCA audit, he said, the FBR will first check the data pertaining to the period of January-June (2010-2011) when maximum amount of refunds were paid through the electronic system. Initially, refund verification of at least six months' period has to be done by the audit teams of the RTOs. The e-audit would be conducted in the light of observations made by officials in the field formations on the ERS under a transparent policy.
He said that the FBR would also share the report of Muhammad Raza Baqir Chief Commissioner Regional Tax Office Karachi on the ERS with the Chief Commissioners of LTUs/RTOs during the upcoming national tax conference to be convened on July 23, 2011. Baqir has pointed out some strange phenomena in the refunds paid through the system has shown a major increase of 220 percent against export growth of 62 percent during a specific period of 2010-2011. The FBR has decided to take up the matter with the Chief Commissioners to conduct e-audit of the sales tax refunds paid under the ERS.
When asked why the concerned authorities dealing with the ERS had failed to check such abnormal trend in refunds paid vis-à-vis exports, Butt said that the FBR would ensure completion of PRA of the refund paid under the electronic system by the end of July. In this connection, the FBR will also conduct training of officials for conducting proper e-audit of the refund paid under the new system. The availability of the data to the field formations would be ensured for completion of the PRA by the above mentioned deadline. The input/output tax and refund on packing material would also be examined under the new system. The actual consumption of raw material, packing materials, chemicals and utilities in exports may be examined under the ERS, he added.
FBR Member IR said that monitoring of the ERS is very important to make the system foolproof, if required. About the present tax policy on audit system, he expressed dissatisfaction over the quality of audit conducted in the field formations. The audit policy will be re-visited with the help of FBR Taxpayers Audit Wing as the desired objective of audit has been achieved by the FBR.
Presently, audit is being conducted hurriedly in the field formations without taking into account third-party information and risk-based profiling of taxpayers. The notices should be served on the basis of authentic data under the supervision of the concerned Chief Commissioner. The 100 percent implementation of the Taxpayer Audit Management System (TAMS) is also necessary for conducting audit on the basis of risk-based profiling of registered persons.
About the strategy which helped the FBR in meeting the revenue collection target of Rs 1588 billion in 2010-11, Khawar said that effective enforcement and monitoring had helped in amassing revenue collection target. The FBR had generated around Rs 6-7 billion from the amnesty schemes of sales tax, income tax and customs duty. The taxation measures taken in March 2011 resulted in generating revenue collection of approximately Rs 50 billion. The recovery of arrears, effective monitoring of withholding agents and enforcement actions in the field formations also contributed in the achievement of the target.
The monthly and quarterly revenue collection targets for this fiscal year would be fixed for the field formations taking into account final figures of revenue collection in 2011-12, enforcement of the Finance Act 2011 and other measures including documentation of economy. The targets for the first six months of 2011-12 would be fixed realistically and it would be ensured that the targets should not be very low in the first half of 2011-12. The ratio of the revenue collection target for the first six months could be 45 percent of total revenue collection. In the second half of 2011-12, the revenue collection target could be 55 percent of the total target of 2011-12. However, the final figures and distribution of targets would be fixed taking into account feedback of the Chief Commissioners in the coming national tax conference.
It is important to mention that field visits of FBR Member IR to most of the LTUs/RTOs during last month of past fiscal year played an important role in improving revenue collection. For example, FBR Member IR frequently visited Karachi and stayed with the Karachi based tax officials for consecutive two days for monitoring revenue collection at the business hub of the country for consecutive 48 hours in last days of current fiscal. Similarly, he paid visits to most of the RTOs and LTUs to monitor collection at the field formations with constant monitoring on day to day basis. The day and night efforts of the FBR IR Wing played a key role in achievement of the revenue collection target of Rs 1588 billion in 2010-11.
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