Unjustified audit notices annoy taxpayers

Unjustified audit notices annoy taxpayers

KARACHI: Overseas Investors Chamber of Commerce and Industry (OICCI) has highlighted the issue of unjustified audit notices served to taxpayers and said as a result companies are incurring huge administrative costs.

The OICCI in its proposals for budget 2022/2023 submitted to the Federal Board of Revenue (FBR) pointed out that each year companies are served with notices without any proper justification, requiring them to produce large volume of data and reconciliation.

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This is against the concept of Universal Self-Assessment Scheme whereby a tax return filed is generally considered to be correct in the eyes of FBR unless there is proper justification to prove otherwise.

“As a result, companies are incurring huge administrative costs for audit every year as well as litigation costs to pursue their matters before various appellate forums for an indefinite period of time,” the OICCI said.

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It recommended that the previous limitation of conducting tax audits once in every three years should be restored.

Rules to be implemented under Section 177(2) of Income Tax Ordinance, 2001 defining risk based, sample driven and cost-efficient audit criteria instead of calling 100 per cent information for voluminous transactional data resulting in tedious exercises, wastage of man hours and no additional benefits to national exchequer.

Timeline to conclude audit after submission of requisite information by the taxpayer should be specifically provided in section 177 of the Ordinance.

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FBR letter on withdrawal of earlier directives related to attachment of bank accounts dated October 11, 2021 should be withdrawn and it should be provided in the law that recovery proceedings shall not be initiated until tax assessments have passed at least one independent forum.

To reduce the litigation disposal time and avoid unnecessary litigations, it is recommended: “Proviso should be added to section 124 that in case Commissioner fails to issue appeal effect order within stipulated time period, taxpayers’ position should be deemed in effect.”

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