The Federal Board of Revenue (FBR) has compiled a list of 1000 taxpayers having highest income within the jurisdiction of Regional Tax Office (RTO), Rawalpindi for selection of non-corporate cases for audit.
Sources told Business Recorder on Thursday that the audit of the non-corporate sector including individuals, partnership and Associate of Persons (AoPs) has been started in the first phase, test audit has been launched at RTO Rawalpindi. Once the pilot is being completed, the audit would be conducted in the remaining RTOs.
Out of around 10,000 taxpayers within the jurisdiction of RTO, Rawalpindi, the FBR has picked 1000 top income earners. The board would apply the criteria on these cases for selection of around 40-50 cases for audit. Thus, selected units would be picked for audit out of 1000 leading non-corporate taxpayers.
The board had finalised criteria for carrying out detailed audit of the non-corporate sector. It is not necessary to select all non-corporate cases selected for audit after applying the laid down parameters. Only potential cases would be audited taking into account the number of auditors available for completion of the task. Presently, the workforce requirement is the major concern for which necessary incentives should be given to the auditors.
Sources said that the criteria for selection of non-corporate cases for audit is totally confidential. In broader terms, the units showing losses for the last three years could be selected for audit.
Sources said that the selection criteria may include difference between sale data in sales tax returns and income tax returns, whereas export figures in income tax returns and customs record did not match. The auditors could also examine assets and liabilities of certain companies have been increased or not.
Some of other important parameters for selecting non-corporate cases for field audit included difference in percentage of gross profit to sales from sector ratio. This showed that the board intends to select certain units for audit where deviation is found in industrial average in gross profits and expenses.
The board may also scrutinise cases of excessive refund claims, persistent losses, exemption certificates and low annual turnover during the last few years. The data of post-refund audit, exemption certificates, repeated losses and excessive refunds would be checked for audit purposes.