Eliminating commissioner audit selection power  sought

Eliminating commissioner audit selection power sought

KARACHI: The Karachi Tax Bar Association (KTBA) has proposed the discretionary power of commissioner Inland Revenue to select audit cases should be eliminated.

“The power to select should only be exercised by the Federal Board of Revenue (FBR) under Section 214C of Income Tax Ordinance, 2001,” the tax bar proposed in its proposals for budget 2022/2023.

The tax bar said Sub-Section (2) of Section 138 provides that If the amount referred to in the notice issued under sub-section (1) is not paid within the time specified therein or within the further time, if any, allowed by the Commissioner, the Commissioner may proceed to recover the tax in the prescribed manner.

“The tax authorities construe that term ‘payment’ mentioned in the section 140 does not cover amount recovered from the tax payer,” it added.

The KTBA said that rigorous proceedings causing hardship to taxpayers and leading protracted departmental and appellate proceedings.

“The power to select the return of income may rest only with the FBR already having the powers to select the case randomly through Computer U/s. 214C of the Ordinance,” it recommended.

The Commissioner power to select cases for audit should be subject to prescribed rules. The taxpayer should be given an opportunity to explain his position with respect to basis of selection pronounced by the Commissioner.

The proposal will streamline and linear amendment procedure to promote taxpayer confidence and compliance culture promoting documentation.

It will also redress the plight faced by taxpayers where multiple tax years are opened for audit by tax authorities.

Earlier, the KTBA also suggested the FBR to increase minimum threshold for collection of withholding tax on consumption of electricity by domestic users

it said that Section 235 of Income Tax Ordinance, 2001 provides tax on domestic electricity bills at Rs25,000 or more per month if the payer is not on the Active Taxpayers List (ATL).

“This provision is non cognizant of the civic structure of our country as a majority of the people are either living in rented places or in family house,” the tax bar said.

Hence the nexus between the consumer and the owner of electricity unit is not linear all time. The process of changing title of utility connection is quite cumbersome and is linked with the property documents, it added.

The KTBA suggested that that this provision of law should be permitted. “As minimum threshold should be raised from Rs25,000 to Rs50,000,” it added.

Giving rationale to the suggestion, the tax bar said that it will address the undue hardships for domestic consumers where consumer of electricity is different from owner of unit.