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Tag: audit

  • FBR conducts audit of all refund cases

    FBR conducts audit of all refund cases

    ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday said that the tax machinery conducts audit of all refund cases.

    “It is baseless to assume that FBR does not conduct the scrutiny. The processing of the case may take time but it is certain that all refund cases are audited,” the FBR said.

    In this regard, the FBR issued a clarification on the news aired on electronic media about the issuance of fake refunds.

    FBR has explained that two processes are being used to deal with refund cases.

    The first is the processing of refunds through automated system for the exporters.

    In this process, the audit of the refund is conducted after the issuance of refunds.

    The other system of refund issuance has been devised for the taxpayers not associated with the export sector.

    The refunds issued through this mode are called the “carry forward refunds.” Such refunds are issued once in a year. The audit is conducted before the issuance of such refunds.

    FBR has clarified that taxpayers involved in presenting the wrong invoices are dealt strictly and recovery is made from them.

    Moreover, penalty and default surcharge is also imposed to curb this practice.

    Sometimes, the audit process of refunds takes longer period of time which may cause problem of liquidity for the exporter, in case of delayed issuance of refunds.

    To avert liquidity crunch for the businesses, the refunds are issued and the scrutiny is conducted afterwards.

    There are certain inbuilt checks within the system to match the input claim by one person with output claim by another person.

    To avoid revenue loss, FBR has almost resolved the issue of fake invoices. Sometimes, it becomes a little cumbersome and lengthy to check the flying invoices but the scrutiny is conducted in all the cases. FBR has computer analytics system of CREST.

  • FBR empowered for closure of automatic audit selection

    FBR empowered for closure of automatic audit selection

    ISLAMABAD: Federal Board of Revenue (FBR) has been empowered to conclude cases which were automatic selected for audit.

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  • Post refund divisions to be set up at RTOs/LTUs to audit claims

    Post refund divisions to be set up at RTOs/LTUs to audit claims

    ISLAMABAD: Federal Board of Revenue (FBR) has decided to audit sales tax refunds by establishing ‘refund division’ at all Regional Tax Offices (RTOs) and Large Taxpayers Units (LTUs).

    According to amended Sales Tax Rules, 2006 issued by the FBR the Rule 27 has been amended to establish Centralized Sales Tax Refund Office (CSTRO), Refund Division and posting of officers.

    The FBR said that a CSTRO would be established under the Board for centralized payment of all refund amounts as due under the Act.

    Further a Refund Division will be established, which will be headed by an officer, not below the rank of Assistant Commissioner, herein after referred to as officer-in-charge, duly supported by audit staff referred to as processing officers, to examine, process and settle the refund claims filed under these rules.

    Further Post Refund Division in each RTO or LTU shall be established, which will be headed by an officer not below the rank of an Assistant Commissioner to audit the refund claims processed and sanctioned by the Refund Division.

    The FBR said that that scrutiny of the refund claims processed or sanctioned after the June 30, 2014 shall be carried out on the basis of risk-based selection through computerized Post Refund Scrutiny (PRS):

    Provided that where the Commissioner Inland Revenue has reasons to believe that a registered person, whose refund claim was processed or sanctioned, has been paid refund which was not admissible to him, he may direct through order in writing to conduct computerized Post Refund Scrutiny (PRS) of such claim.

    Post refund audit of refund claims process through RMS will be the responsibility of the audit Divisions of respective RTO/LTU.

    The registered person claiming refund under these rules shall maintain and keep all the paper documents relating to the refund claim, such as invoices, credit notes, debit notes, goods declarations, bank credit advice, etc. in his office.

  • FBR to launch new audit framework next week: Shabbar Zaidi

    FBR to launch new audit framework next week: Shabbar Zaidi

    Syed Shabbar Zaidi, Chairman of the Federal Board of Revenue (FBR), revealed on Friday that a new audit framework is set to be introduced next week, aiming to streamline tax procedures and enhance ease of compliance for taxpayers.

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  • FBR detects huge gap in indirect revenue collection; launches sales tax, federal excise monitoring

    FBR detects huge gap in indirect revenue collection; launches sales tax, federal excise monitoring

    ISLAMABAD: Federal Board of Revenue (FBR) has launched monitoring of sales tax and federal excise duty following huge gap detected in indirect revenue collection.

    “There appear to be a big gap between actual collection of sales tax / federal excise and its true potential,” the FBR said in a communication sent to all Chief Commissioners of Inland Revenue.

    The FBR said that in order to bridge the gap numerous amendments were made in Sales Tax Act, 1990 and Federal Excise Act, 2005 through Finance Act, 2019.

    Now administrative measures are required to be strengthened / implement the policy corrections/

    The FBR directed the field formations to adopt the following steps in addition to their regular actions:

    01. Immediate action on non-files of July and August 2019, especially where the registered persons have filed their sales tax returns for the tax periods of May and June 2019. In addition, desk audit of the registered persons who filed returns for the month of July and August 2019 to be conducted especially those who were previously included in five reduced / zero rated sectors.

    02. Monitoring of registered persons paying sales tax under Eighth Schedule of the Sales Tax Act, 1990 especially in those cases where registered persons are supplying at reduced rate.

    03. Sectoral analysis/reports must be made by the field formations having jurisdiction over a specific sector, and these reports should be shared with the FBR as well as other field formations having jurisdiction over same sectors. Any success stories be identified.

    04. The registered persons dealing in third schedule items should be specifically monitored to ensure the sales tax is being paid on the retail price.

    05. Printing of retail price has to be ensured and price lists of all such products have to be obtained from the manufactured/importers filing in Third Schedule to compared with the printed prices of products supplied in market.

    06. Monitoring of stock position as on June 30, 2019 filed by the manufacturers/importers of goods which have been included in Third Schedule to ensure that supply is made and tax is charged on retail price.

    07. Timely filing of sales tax/federal excise returns along with all the annexure should be ensured. It has been observed that the registered persons do intentionally skip some annexures while filing the returns.

    08. Analysis of Annexure J showing the sale, production and stock must be at regular basis.

    09. Special focus should be made on those cases which have piled up massive carry forward and are only paying sales tax under Section 8B of the Sales Tax Act, 1990.

    10. FBR instructions / SOP for revision of the Sales Tax Returns should be followed in letter and spirit.

  • Customs officers authorized business access for audit

    Customs officers authorized business access for audit

    KARACHI: Customs officers have been authorized under customs laws to enter business premises to access records necessary for the purpose of audit.

    Federal Board of Revenue (FBR) issued Customs Act, 1969 updated up to June 30, 2019 incorporating amendments introduced through Finance Act, 2019.

    The Section 26B of the Act authorizes customs officers to access record for the purpose of audit.

    Section 26B: Access for the purposes of audit.-

    Sub-Section (1): The appropriate officer of Customs, after giving a notice in writing specifying the date of visit, shall have access to business or manufacturing premises, registered office or any other place where any goods, stocks, documents or records relating to the ongoing audit are kept or maintained. Such officer may inspect the goods, stocks, documents, records, data, correspondence, accounts, statements, utility bills, bank statements, information regarding nature and sources of funds or assets with which his business is financed, and any other records or documents required under any Federal or Provincial laws, maintained in any form or mode. Such an officer may take into his custody such documents, records or any part thereof, in such form as he may deem fit, against a signed receipt.

    Sub-Section (2): In all cases, except where it would defeat the purpose of the audit, a reasonable advance notice regarding a visit shall be given to the person concerned.

    Sub-Section (3): Whosoever causes any obstruction or fails to provide any documents, record, statement etc, as required under subsection (1), with an intention to defeat the purpose of the Act by way of destroying, altering or concealing any books, documents or records required to be maintained under this Act, shall be guilty of an offence under this section.

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  • FBR bars tax officials from entering taxpayers premises for search, audit

    FBR bars tax officials from entering taxpayers premises for search, audit

    ISLAMABAD: Federal Board of Revenue (FBR) has barred officers of Inland Revenue from entering premises of taxpayers for search and audit purposes.

    The FBR issued a notification on Monday and restricted IR officers for invoking Section 175(1) of Income Tax Ordinance, 2001.

    The FBR received numerous complaints of taxpayers that tax officials were abusing powers available under this section.

    The IR officers were allowed under this section to enter and search premises.—

    (1) In order to enforce any provision of this Ordinance (including for the purpose of making an audit of a taxpayer or a survey of persons liable to tax), the Commissioner or any officer authorised in writing by the Commissioner for the purposes of this section –

    (a) shall, at all times and without prior notice, have full and free access to any premises, place, accounts, documents or computer;

    (b) may stamp, or make an extract or copy of any accounts, documents or computer-stored information to which access is obtained under clause (a);

    (c) may impound any accounts or documents and retain them for so long as may be necessary for examination or for the purposes of prosecution;

    (d) may, where a hard copy or computer disk of information stored on a computer is not made available, impound and retain the computer for as long as is necessary to copy the information
    required; and

    (e) may make an inventory of any articles found in any premises or place to which access is obtained under clause (a).

    The FBR said that in exceptional cases the section may be invoked but with the prior permission of the chief commissioner of Inland Revenue.

  • FBR to launch audit of withholding agents

    FBR to launch audit of withholding agents

    KARACHI: Federal Board of Revenue (FBR) on Monday initiated a program of skill development of its officials to conduct system audit of withholding agents.

    A statement said that under the dynamic leadership of Syed Shabbar Zaidi, Chairman, FBR, a new initiative had been taken up by Faheem-ul-Haq, Director General (Withholding) and launched by Dr. Aftab Imam, Chief Commissioner, Corporate Regional Tax Office, Karachi.

    This initiative comprises the skill development of officers for system audit of withholding agents to monitor and improve the collection and deposition of withholding tax.

    The field officers of all eight field formations of Sindh and Balochistan i.e. Corporate RTO Karachi, Large Taxpayers Units I & II, RTO II & III Karachi, RTO Hyderabad, Quetta and Sukkur; are being trained into the system audit of withholding agents by a renowned chartered accountant.

  • Fresh audits of PIA, Pakistan Steel to be conducted for transparency

    Fresh audits of PIA, Pakistan Steel to be conducted for transparency

    KARACHI: The federal government will conduct fresh audit of Pakistan International Airlines (PIA) and Pakistan Steel Mills (PSM) in order to ensure transparency in state-owned enterprises (SOE).

    The audits would be initiated for improving SOE governance, transparency and efficiency.

    The federal government will make public the outcome of the audits by December 2019, which was agreed by Pakistani authorities with the International Monetary Fund (IMF).

    The have approved the privatization of seven companies based on their good privatization prospects. They will follow best practices regarding the process and conditions of privatization to ensure a successful and transparent outcome.

    The government will sort SOEs into companies for sale, liquidation, or retaining under state ownership. This has to be done by end-September 2020.

    Further the government will submit to parliament a new State-Owned Enterprise Law by end-September 2020 aimed at modernizing and clearly defining the role of the State as owner, regulator, and shareholder of SOEs.

    In this context, the recently established holding company to manage SOEs will follow the required governance and transparency principles in line with international best practices.

    The IMF will provide technical assistance to support the development of this law and to review ownership arrangements with a view to designing an effective ownership model.

    Pakistan has assured the IMF of taking measures for improvement of the economy, which included:

    — Commit to not grant further tax amnesties Continuous

    — Issue licenses for the track-and-trace system for excises on cigarettes end-September 2019

    — Adopt measures to strengthen the effectiveness of the AML/CFT framework to support the country’s efforts to exit end-October 2019 the Financial Action Task Force list of jurisdictions with serious deficiencies

    — Submit to parliament, in consultation with IMF staff, amendments to the State Bank of Pakistan Act to address all end-December 2019 recommendations of the new 2019 Safeguards Assessment Report and the 2016 Technical Assistance Report on Central Bank Law Reform.

    — Notify the FY 2020 electricity tariff schedule as determined by the regulator end-September 2019

    — Prepare a comprehensive circular debt reduction plan in collaboration with international partners (para. 19 MEFP) end-September 2019

    — Submit to parliament amendments to the NEPRA Act to (i) ensure full automaticity of the quarterly tariff end-December 2019 adjustments and (ii) eliminate the gap between the regular annual tariff determination and notification by the government

  • Commissioners IR empowered to conduct audit of taxpayers every year

    Commissioners IR empowered to conduct audit of taxpayers every year

    KARACHI: Commissioners of Inland Revenue have been empowered to conduct audit of a registered taxpayer every year after removal of restriction through Finance Bill 2019.

    Through Finance Act, 2018 a restriction was imposed on offices of the Federal Board of Revenue (FBR) under which they would conduct audit of taxpayers once in every three years.

    However, the Finance Bill 2019 proposed to delete the proviso which was introduced through Finance Act last year.

    Experts at EY Ford Rhodes Chartered Accountants said that certain taxpayers challenged the audit proceedings under Section 25 where sales tax audit had already been conducted during any of the last three years on the premise that the amendment introduced through the Finance Act, 2018 was procedural change in law and was applicable retrospectively.

    Recently, the Honorable Lahore High Court has adjudged the matter in favor of the taxpayer. It appears that the proposed deletion of the third proviso to Section 25 will neutralize the judgment of the Honorable Lahore High Court.