The Federal Board of Revenue (FBR) has directed FBR Member Taxpayer Audit to complete computerised selection of cases for audit of individuals, Association of Persons (AOPs) and corporate sector by November 15, 2012 for Tax Year 2011.
Sources told Business Recorder here on Monday that the FBR has issued instructions to the FBR Member Taxpayer Audit and Pakistan Revenue Automation Limited (PRAL) to complete selection process by November 15. Thus, instead of commissioners the FBR would select sales tax, federal excise duty and income tax audit cases for Tax Year 2011.
According to sources, the FBR is empowered to select cases for audit under section 214C of the Income Tax Ordinance, 2001, Section 72B of the Sales Tax Act, 1990 and Section 42B of the Federal Excise Act 2005. In a recent judgement on writ R.P. No 393/2012, Lahore High Court has declared the notices issued by the Commissioner under Section 177, 25 and 46 of the Income Tax Ordinance, 2001, Sales Tax Act, 1990 and Federal Excise Act 2005 purportedly calling for record of the petitioners, but in fact selecting the petitioners for Audit of their tax affairs is unconstitutional.
The Annual Audit Plan 2012-13 (Tax Year 2011) is being developed using risk based auditing as an integral component. The primary purpose of the tax audit is to monitor and maintain the self assessment system by encouraging voluntary compliance and to maintain public confidence in the integrity of the tax system through affording an avenue to educate tax payers on various provisions of the tax law, sources added.
Sources said that the identification of cases for full/detailed audit for the Tax Year 2011 of Income Tax and corresponding tax periods for Sales Tax and Federal Excise will be made through computer ballot on the risk parameters with the help of M/s PRAL. To ensure transparency, M/s PRAL shall also post the names of the taxpayers selected by the Board on the official web page for the convenience of the taxpayers. Where the taxpayers are likely to pay all the three inland taxes, audit of income tax, sales tax and FED will be taken up simultaneously.