To avoid disqualification of Universal Self Assessment Scheme (USAS) along with payment of huge penalty for late filing, taxpayers have been advised to timely file their income tax returns for the Tax Year 2015 by September 30 deadline this year.
Sources told Business Recorder here on Monday that all late filers of income tax returns shall automatically be selected for audit of their tax affairs following signing of the Finance Act, 2015 by the President - the modified amended USAS would become effective from July 1, 2015. Most of the taxpayers are expected to timely file their income tax returns (Tax Year 2015) by the deadline of September 30 this year to avoid huge payment of 25 percent penalty for late filing and to qualify for the Universal Self Assessment Scheme (USAS).
Last year over 2 lakh income tax returns were filed after due date, which is extended up to December 2014. These were late filers of income tax returns, but qualified under the self assessment scheme for Tax Year 2014. Following signing of the Finance Act 2015 by the President, the modified amended USAS would become effective from July 1, 2015. From last date of return filing ie September 30 to December 31, 2015, a penalty of 25 percent has been proposed under the modified USAS. After this, all late filers would be selected for audit and would not qualify for the USAS. Commissioners can only extend date for filing of returns by 30 days on case-to-case basis. Resultantly, late filers of returns would be excluded from the facility of USAS and subjected to 25 percent penalty after September 30.
It is estimated that the return filers would try to avoid payment of 25 percent penalty by filing returns within the prescribed date. There are least chances that the people would prefer to late file their returns. Thus, a number of persons, who late filed the returns last year, are expected to timely file returns this year. Hopefully most of the persons filing returns would prefer to timely file returns during current year.
Sources said that the FBR has timely circulated the draft of the income tax return form for the stakeholders to comment. The return form would be timely notified and there is no chance to extend the date of filing of returns. Therefore, any return to be field after due date would be subjected to huge penalty of 25 percent.
Sources said that the modified USAS under Finance Act, 2015 has been restricted to return filers only who would timely file return within the due date. USAS has been made conditional to facilitate filers of income tax returns. Now, late filers of income tax returns would not qualify for the self assessment scheme. The decision would be applicable on all categories of taxpayers. Under the modified USAS only those returns would qualify for self-assessment, which have been timely filed. Secondly, tax liability has been duly paid on the basis of filed returns. The late filed returns cannot be treated as assessment orders under the modified USAS.
Finance Bill 2015 approved by the National Assembly here on Tuesday empowered Federal Board of Revenue (FBR) to automatically select any case of late filer for audit of its income tax under new section 214D of the Income Tax Ordinance, 2001. Through amendment in the Finance Bill 2015, the new section 214D (Automatic selection for audit) said that a person shall be automatically selected for audit of its Income tax affairs for a tax year if the return is not filed within the due date. It is required to be filed as specified in section 118, or, as the case may be, not filed within the time extended by the Board under section 214A or further extended for a period not exceeding thirty days by the Commissioner under section 119 or the tax payable under sub-section (1) of section 137 has not been paid. Audit of Income tax affairs of persons automatically selected under sub-section (1) shall be conducted as per procedure given in section 177 and all the provisions of the Ordinance shall apply accordingly:
Provided that audit proceedings shall only be initiated after expiry of ninety days from the date as mentioned in sub-section (1). (3) Subject to section 182, 205 and 214C, sub-section (1) shall not apply if the person files the return within ninety days from the date as mentioned in sub-section (1) and-
(a) twenty five percent higher tax, than the tax paid during immediately preceding tax year, has been paid by a person on the basis of taxable Income and had declared taxable income in the return for immediately preceding tax year; or (b) tax at the rate of two percent of the turnover or the tax payable under Part I of the First Schedule, whichever is higher, has been paid by a person along with the return and in the immediately preceding tax year has either not filed a return or had declared income below taxable limit:
Provided that where return has been filed for the immediately preceding tax year, turnover declared for the tax year is not less than the turnover declared for the immediately preceding tax year. (4) The provisions of sub-section (1) and sections 177 and 214C shall not apply, for a tax year, to a person registered as retailer under rule (4) of the Sales Tax Special Procedure Rules, 2007 subject to the condition that name of the person registered under rule (4) of the Sales Tax Special Procedure Rules, 2007 remained on the sales tax active taxpayers' list throughout the tax year, (5) Sub-section (4) shall have effect from the date appointed by the Board through Notification in the official gazette, new section 214D added.
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