KARACHI: Tax managers have suggested that audit cases should be assigned to tax officials on the basis of skills and experience.
“Cases should be assigned on the basis of skill and experience of the officers as it reduces no change monitoring and enhance productivity,” according to an official document on monitoring of withholding taxes.
If a pre-monitoring analysis is conducted by the officers, they will be in a position to ascertain the true potential of specific cases, sectors and their overall impact on the revenue generating activities of the department.
For this purpose, they should examine:
— nature and extent of business entities;
— past compliance behaviour, tax fraud activities;
— group activities as to compliance of tax laws;
— results of previous monitoring and tax audits by the Income Tax and the Sales Tax departments;
— overall declarations and amended Returns, etc, penalties, refunds and corporate status can give a good guidance for selection or otherwise of a case for detailed monitoring of withholding taxes;
— Past information about surveys and special/sectoral studies can also be helpful;
— Taxpayer’s complete particulars are important for follow-up;
For the sake of transparency, it is always good for the tax department to state the following;
— Scope of the monitoring process;
— Process to be followed by the departmental officers for monitoring of a specific case;
— The taxpayers should be informed as to how they will be contacted;
— How the case is to be discussed and who will represent the department;
— How the record will be examined;
— How to convey the findings of the examination/discussions on the cases to the taxpayers;
— Mechanism for submitting replies by the taxpayers;
— Writing the reports about monitoring; and
— To determine future course of action under the relevant provisions of law in the light of the findings of the report, wherever requiring further action.