FBR urged to prescribe time limit for audit conclusion

FBR urged to prescribe time limit for audit conclusion

The Karachi Tax Bar Association (KTBA) has called upon the Federal Board of Revenue (FBR) to institute a definitive time limit for concluding audit proceedings in sales tax cases.

The issue was a focal point in a pre-budget 2021/2022 seminar organized by the association, where concerns were raised about the absence of a specified timeframe for completing sales tax audits.

Key concerns highlighted during the seminar include the lack of a prescribed time limit under any sales tax law for concluding audit proceedings. Participants emphasized that the prolonged duration of audit proceedings, often extending over several years, imposes an undue burden on registered persons who are compelled to submit records multiple times.

The inefficiency on the part of the department has been a significant point of contention, leading to increased compliance costs for registered entities. It was noted that this inefficiency not only hampers the smooth functioning of businesses but also places an additional financial burden on them.

The KTBA pointed out that the Apex Court of Pakistan has previously expressed agreement that a reasonable time frame for completing audit proceedings is one year. This acknowledgment from the highest court underscores the importance of expeditious resolution to maintain fairness and efficiency in the tax assessment process.

In light of these concerns and the guidance from the Supreme Court, the association strongly recommended the establishment of a time limit of one year for concluding audit proceedings. This proposal aligns with the court’s directives and aims to strike a balance between the FBR’s oversight responsibilities and the rights of registered persons.

Setting a time limit for sales tax audit proceedings is seen as a crucial step towards streamlining the tax assessment process, reducing unnecessary delays, and promoting a business-friendly environment. The KTBA believes that such a measure will not only enhance the efficiency of the FBR but also contribute to a more transparent and accountable taxation system.

The call for a defined time limit reflects a broader commitment to promoting fairness, accountability, and efficiency in the tax administration process. The association anticipates that the implementation of a one-year time frame will benefit both the FBR and registered persons, fostering a more conducive environment for business growth and economic development.

As stakeholders await the FBR’s response to these recommendations, the issue of time limits for sales tax audit proceedings is likely to remain a central topic of discussion in the ongoing efforts to reform and enhance Pakistan’s taxation system.