The Federal Board of Revenue (FBR) has decided to suspend implementation of section 177 of Income Tax Ordinance 2001 to restrain field formations from selecting cases for audit, ensuring effective taxpayer's audit under the new national audit plan and manual.
Sources told Business Recorder that, during the Board-in-Council meeting here on Tuesday, FBR Chairman Abdullah Yusuf directed FBR Member Direct Taxes to temporarily suspend section 177 of the Ordinance 2001. It seemed to be a bold decision for suspension of a major provision of the income tax law for carrying out audit under the computerised criteria chalked out by the FBR Audit Wing.
In this connection, the FBR would issue instructions to Regional Commissioners for implementation of the decision. Under section 177, commissioners are empowered to select a person for audit in accordance with the criteria laid down by FBR.
The rationale is to conduct audit under revamped national audit plan in a professional manner. The audit plan is a comprehensive document, specifically designed for audit purposes. The audit selection process would be done by applying computerised criteria on scientific methods vis-à-vis data analysis.
Sources said that FBR Chairman also advised the Direct Taxes Wing to focus on corporate cases, and non-corporate taxpayers should not be harassed. Most of the income tax demands have been raised in banking and petroleum sectors. Therefore, audit would be done by professional auditors, covering the entire corporate sector. The audit techniques by the professionals would result in better audit system.
Tax authorities have directed FBR Direct Taxes Wing to improve revenue collection from telecommunication, banking and petroleum sectors, whereas sales tax department would primarily concentrate on telecom and petroleum sectors.
Board-in-council meeting also appreciated the improvement in revenue collection during 2007-08. The updated figures showed that the FBR had collected over Rs 1.04 trillion, against the provisional collection of Rs 1.02 trillion, during 2007-08.
The FBR Chairman said that the board had successfully crossed the figure of Rs 1 trillion by surpassing the revised target of Rs 990 billion for 2007-08. All individual taxes also surpassed their respective targets. The payments in the pipelines would also come in a few days, which would further improve the revenue collection figure.