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Audit of tax returns

Audit of tax returns

The Federal Board of Revenue (FBR) has issued a new audit policy for 2014 for the taxpayers according to which 12 percent of the total returns of the taxpayers, covering the tax period  between July 1, 2012 and June 30, 2013, will be selected for the audit of income tax, sales tax, and excise duty through random computer balloting. However, those taxpayers who were selected for the audit in 2012 will not be included in the new computer balloting. Earlier, the board had decided to audit 15 percent tax returns, but later the ratio was brought down to 12 percent. The reason to launch this exercise is, obviously, to discourage tax evasion and pinpoint the loopholes and lacunas in the tax system which are exploited for tax evasion. According to official circles, there is no harm in involving a certain proportion of tax returns filed under the income tax, sales tax and federal excise laws for audit to ensure proper compliance with the law. They say that the process should not be deemed as mistreatment of any taxpayer. However, if the tax officials find discrepancies in the returns of certain taxpayers, show cause notices will be served on them for proper tax assessment.

Apparently, this is a good decision to bring the elite and well to do classes in the tax net and discourage the exploitation of the government laws. Everyone who earns taxable income should pay taxes no matter how influential he is. But the fact remains that tougher the laws, harder the implementation. Unfortunately, the black sheep in the government departments apply every section of the law to avail maximum benefits for themselves otherwise there is no harm in the audit of the taxpayers if norms of justice and fair plays are kept intact.

The business class in Pakistan is already under pressure due to various reasons and this kind of practice should not deprive them of their peace of mind.