DGs of LTUs, RTOs told to check misuse of section 177

The Federal Board of Revenue has directed the Director Generals of LTUs and RTOs to check the misuse of section 177 of the Income Tax Ordinance 2001 for selection of cases for audit. Sources told Business Recorder on Saturday that some complaints were filed by lawyers and trade bodies about the issuance of audit notices without reasonable justification.
The FBR has directed the DGs to discrete in selection of cases for audit having revenue potential within the given audit guidelines and guard against the misuse of section 177 of the Ordinance 2001. According to sources, regional tax departments have issued notices to different categories of taxpayers particularly professional service providers.
Desk audit is also under way to select potential cases for proper audit under section 177 of the Ordinance 2001. The FBR has informed at different forums that even genuine cases selected for audit are making unnecessary hue and cry to avoid documentation.
During the last meeting of Senate Standing Committee on Finance, tax authorities have categorically conveyed to the committee that the doctors and medical practitioners are making hue and cry over the issuance of audit notices.
The FBR Chairman had sought full political support of the present government to bring potential sectors into the tax net during last meeting of the Public Accounts Committee. He further said that FBR has started bringing regulatory authorities and public sector organisations into the tax net.
These regulatory departments are resisting, who have to pay income tax under Income Tax Ordinance 2001. He said that the FBR has started an exercise to expand the tax net. Whenever tax officials even issue a letter to the taxpayer for compliance, they start making hue and cry.
Instead of responding to department, taxpayer alleges harassment by the tax officials, which is unjustified. The government should support the FBR efforts to bring the non-compliant taxpayers into the tax net. In such cases, the government should back the tax machinery instead of non-compliant sectors.
"If there is some hue and cry by non-compliant sectors, the government should stand behind the FBR and support its efforts to broaden the tax-base. We have to bring every potential sector into tax net," FBR chairman further informed the PAC.