KARACHI: Federal Board of Revenue is set to suggest changes to an auditing law related to non-filers as it faces capacity restrictions to manage swelling audit cases.
An official stated FBR is coming to reassess automatic selection of audit as there is a big backlog of unresolved audit cases which have swelled to over 600,000, reported The News.
The annual audit policy which was set to be introduced in November 2017, was also suspended due to unresolved audit cases, the official added.
It is expected FBR could recommend revisions to the ordinance via Finance Bill 2018 to takeback or enforce a limit on automatic audit selection, a source in Regional Tax Office, Karachi disclosed.
Section (214D) was put in place into the Income Tax Ordinance 2001 via the Finance Act 2016 to promote filing of income tax returns.
Under this newly inserted provision, those taxpayers who fail to file annual income tax returns till last date announced by the tax regulator, will automatically be selected for audit.
Also, all non-filers from tax years 2015, 2016 and 2017 were also to be made a part of this audit list after introduction of this provision.
However, these cases are entirely separate from those selected by FBR via random computer balloting and chosen by Commissioner Inland Revenue.
The tax regulator has other options up its sleeve to add potential candidates into the tax net and impose the filing of returns. Also, it has already initiated tracking of withholding taxes to determine potential taxpayers.
And FBR has established separate units which will be expanded to other cities for widening the tax base. Regarding Section 214D, tax experts stated the provision was brought in as a test case to raise revenue collection by generating fear of audit.
According to a tax practitioner, as per current regulations a non-filer could pay 25 percent additional tax from previous years paid tax to get precluded from automatic selection of audit.
