ISLAMABAD: The mobile companies providing cellular services in the country have paid an amount of Rs 42,549.3 million taxes during the last five years.
The major contribution by these companies in terms of tax payment was Rs 10,358.3 million during the year 2013-14.
The year-wise break-up issued by the Finance Division on Sunday revealed that during the year 2012-13, the amount of tax paid was Rs 6,419.3; during 2013-14, Rs. 10,358.3 million; during 2014-15, Rs. 8,286.9 million; during 2015-16, Rs. 8,149.5 million; and during the year 2016-17, the mobile companies paid taxes of Rs 9,335.3 million.
The mobile companies providing cellular mobile services in the country are CM Pak (Zong), Pakistan Telecom Mobile Ltd (Ufone), Pakistan Mobile Communications (Mobilink), Telenor Pakistan and Warid Telecom (now merged with Mobilink).
Regarding mechanism evolved to conduct the audit of receipts and income of those companies, the data further revealed that audit is conducted under three tax statues i.e. Income Tax Ordinance, 2010, Sales Tax Act, 1990 and Federal Excise Act, 2005.
The audit commences after a case is selected for audit under section 177/214C of Income Tax Ordinance 2001, section 72B/25 of Sales Tax Act 1990 and Section 46/42B of FED Act 2005.
The selection is done by both the concerned commissioner and the Federal Board of Revenue. Audit selection is based on different risk parameters (viz-a-viz ITO, 2001, STA, 1990 and FEA, 2005) such as excess claim of P&L expenses, low profitability to assets ratio, consistently many years, high ratio of input tax to output tax and carry forward of input tax.
After selection of case for audit “Audit Manual” prescribes a pre-audit conference with taxpayer in which scope of audit and timeline to complete audit is decided.
Consequently “Information Document Request” (IDRs) is issued for seeking relevant records and information.
After obtaining books of accounts and documents provided by the taxpayer an audit report is prepared and if required a post-audit conference is again conducted with taxpayer to apprise legal and factual discrepancies.
Thereafter, legal notice to amend the assessment order/return of taxpayer is issued to provide lawful opportunity. After affording such opportunity amended order is passed containing discussion and findings of tax audit officer, which is served upon taxpayer along with tax demand notice.
Some other aspects of tax affairs of taxpayers are also taken into consideration while auditing the case and these are: Verification of withholding taxes with respect to disallowances of expenses u/s 21© of the ITO, 2001, examination of genuineness of liabilities declared in balance sheet, verification of input tax claimed u/s 8 of the STA, 1990, verification of all taxable supplies whether same have been charged to sales tax or not, transactions with associates are measured at Arm’s Length standard, admissibility of depreciation and amortization expenses is verified in accordance with section 22, 23 and 24 of Income Tax Ordinance, 2001 and admissibility of P/L expense is verified in view of provisions of section 20(1)/174(2) of ITO, 2001.
