Karachi, December 20, 2023 – The Federal Board of Revenue (FBR) has introduced a streamlined procedure for the electronic audit (e-audit) of taxpayers during the tax year 2024.
The FBR’s recent update to the Sales Tax Rules, 2006, specifically under Section 44AC, outlines the rules and regulations governing the e-audit process.
Rule 44AC: A Comprehensive Overview of the e-Audit Procedure
According to Rule 44AC, when a case has been selected under Section 25 or Section 72B of the Sales Tax Act, 1990, the competent authority may issue directions for conducting an e-audit. The following procedure is to be adopted:
Notice and Assignment: The concerned Commissioner Inland Revenue serves a notice under Section 25 of the Act to the registered person, outlining the reasons for the selection of their case for audit. Subsequently, the Commissioner assigns the case to an Audit Officer responsible for conducting the e-audit.
Electronic Record Submission: Registered persons are required to produce records as mandated by Section 22 of the Act through the FBR’s electronic system, IRIS, or an electronic data carrier as notified by the Board.
Virtual Hearings: A notable feature of the e-audit process is that registered persons are not obligated to appear personally or through an authorized representative before the Audit Officer. However, they can request a virtual personal hearing through IRIS, and such hearings will be exclusively conducted through video links.
Closure of Audit: If, after considering all information, documents, or evidence, the Audit Officer finds no discrepancies and has no conclusive proof against the registered person, the audit may be closed in IRIS, with intimation to the relevant Commissioner Inland Revenue.
Audit Report and Adjudication: If discrepancies are identified, the Audit Officer prepares an audit report containing observations and findings. This report is forwarded to the Commissioner Inland Revenue, who then assigns the case to an Adjudicating Officer. The Adjudicating Officer is responsible for making an order for the assessment of tax, including penalties and default surcharges.
Show Cause Notice and Order: Based on the audit report, the Adjudicating Officer issues a show cause notice through IRIS to the registered person. Following the receipt of the registered person’s explanation, the Adjudicating Officer may pass an order under Section 11 of the Act.
This comprehensive e-audit procedure emphasizes the use of digital platforms for record submission, communication, and virtual hearings, reducing the need for physical appearances and paperwork.
As the FBR continues to leverage technology for tax administration, the e-audit process is expected to enhance the overall efficiency, reduce processing times, and contribute to a more accountable and transparent tax system. Taxpayers are encouraged to familiarize themselves with the updated rules and leverage digital channels for a smoother and more streamlined audit experience.
