ISLAMABAD: Federal Board of Revenue (FBR) has decided to authorize Commissioner Inland Revenue to select cases for audit under relevant provisions of tax laws.
According to an office order issued this week, the FBR said that the Commissioner IR having jurisdiction, shall select cases for audit under Section 177 of the Income Tax Ordinance, 2001, Section 25 of the Sales Tax Act, 1990 and Section 42 of the Federal Excise Act, 2005 on the basis of facts of the case/revenue potential without seeking any approval from the FBR as the same is not envisaged under the provisions of these statutes.
The FBR said that previously in order to comply with the Disbursement Linked Indicatory (DLI) agreed with World Bank under the Pakistan Raises Revenue Project (PRRP), the FBR had issued instructions regarding selection of cases for Non-Risk Based Audit (NRBA) under Section 177 of the Income Tax Ordinance, 2001, Section 25 of the Sales Tax Act, 1990 and Section 42 of the Federal Excise Act, 2005 through a letter on June 23, 2020.
The instructions envisaged that the number of cases selected under the NRBA regime i.e. by relevant field Commissioner, for the period corresponding to 2018 and onwards have to be 10 percent of total number of cases selected for audit under respective statutes through Risk Based Audit Management System subject to clearance by Member (Taxpayers Audit).
“Subsequently, a number of instances were reported to Board [FBR] by the field formations highlighting confusion, the delays in selection of cases, and the departure from the spirit of relevant provisions of statutes mentioned supra having consequent negative impact on demand creation/revenue generation.”
According, in order to streamline the process of selection of cases as per the spirit of the relevant provision of Income Tax Ordinance, 2001, Sales Tax Act, 1990 and Federal Excise Act, 2005, it has been decided that henceforth, the commissioner IR shall select cases for audit under relevant provisions of the tax laws without seeking any approval from the board as the same is not envisaged under the provisions of statutes.
“Moreover, the cases selected under relevant provisions of statutes mentioned above shall be concluded at the earliest and relevant commissioner IR shall personally monitor the proceedings,” the FBR added.