Tax advisers of the Federal Board of Revenue have presented desk audit risk assessment parameters to the Chief Commissioners of the Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) to ensure proper audit of the tax records of the non-corporate and corporate cases without physical interaction with the taxpayers.
Sources told Business Recorder here on Friday that the consultants of the FBR have presented the desk audit risk assessment parameters to the Chief Commissioners of the LTUs and RTOs during the Chief Commissioners Conference held on August 4, 2011. Tax advisers of the FFBR has further informed the conference that the detailed rational, criterion, formula, information/documents to be requisitioned and work to be done under each risk assessment parameters are separately available for the tax officials.
Desk audit risk assessment parameters are: Non-corporate cases: The desk audit risk assessment parameters included verification of claim of Zakat deduction, review of wealth statement and reconciliation thereof, verification of sources of purchase of motor vehicles, non-filers of wealth statements and non-filers of income tax returns where salary is Rs 500,000.
Corporate cases: The desk audit risk assessment parameters included verification of claim of Zakat Deduction, physical review of all auditors report as to any qualification or emphasis para and to ascertain the tax consequences thereof, increase in ratio of creditors to purchases over last three years average to establish genuineness of the creditors by cross verification.
Both non-corporate and corporate cases: The desk audit risk assessment parameters included verification of claim of charitable donations qualifying for straight deduction, verification of claim of exempt income and apportionment of expenses, verification of claim of tax reductions, credits and averaging, verification of claim of prior years refunds adjustments, verification of claim of brought forward losses/un-absorbed depreciation, verification of workers welfare fund, variation in sales as per Sales Tax Returns and Income Tax Returns (difference of more than 1 percent), final tax chargeable and final tax collected or deducted at source do not match (variance tolerance 1 percent), verification of apportionment of business income between Presumptive Tax Regime (PTR) and Non-PTR, compliance of third proviso to sub-section (6) of section 153 (minimum tax on services), review of wealth statement and reconciliation thereof, return on capital less than 10 percent, return on capital is more than 20 percent, refund claim of Rs 50,000 or more in non-corporate cases and non-listed companies and Rs 500,000 or more in other corporate cases, verification of addition in depreciable assets, intangibles and sources thereof and correctness of the claim of depreciation and amortisation, verification of restriction of cost of addition in vehicles not plying for hire, verification of validity of claim of tax deducted from sale of goods and execution of contracts as an adjustable tax and verification of sources of Sales Tax Refunds Out-standing, verification of sources of purchase of motor vehicles, Variance of more than 20 percent in average annual sales to monthly sales reported in Sales Tax Returns. (more than three months), physical review of all auditors report as to any qualification or emphasis para and to ascertain the tax consequences thereof.
Other desk audit risk assessment parameters for both non-corporate and corporate cases included verification of claim of charitable donations qualifying for straight increase in ratio of creditors to purchases over last three years average to establish genuineness of the creditors by cross verification and declaring business income including presumptive tax regime (PTR) sources and the amount of cash withdrawals worked out on the basis of claim of tax collected under section 233A (Cash withdrawals) is more than 20 percent of the turnover declared.
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