KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has suggested the authorities to conduct income tax audit once in three years.
The KCCI in its proposals for budget 2022/2023 submitted to the Federal Board of Revenue (FBR) stated that through Finance Act 2019 powers of Commissioners Inland Revenue and the FBR have been restored to select cases for audit every year which further creates difficulties for registered persons, whereas prior to FY2019-20 audit could be conducted once in 3 years.
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The commissioners already have various powers to carry out amendments of the income tax returns filed for any tax year by the taxpayer under Section 122 (5A).
Therefore, additional audit powers outside the standard audit parameters are often misused by the tax authorities.
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Multiple and overlapping discretionary powers are precisely the hurdle in broadening of tax base, and corruption. Rather than focusing on broadening the tax base, FBR is coming up with novel ways to perpetuate a regime of extortion and harassment. Consequently the country is going nowhere in expanding the tax base and revenue collection.
The KCCI proposed that the audits under Section 177 and 214C should be carried out once in every three years as was introduced through Finance Act 2018, through restoration of clause 105 omitted in Finance Act, 2019.
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Despite of this restriction the Commissioner can carry out assessment under section 122(1)/(5) or 122(5A) of the Income Tax Ordinance, 2001 on the definite information or where declaration of tax payer is erroneous and prejudicial to the interest of revenue.
Giving rationale to the proposal, the chamber said it would alleviate fears of compliant tax-payers. Further, it will help in removal of harassment and extortion through uncalled for and unnecessary audits.
