ISLAMABAD: Federal Board of Revenue (FBR) on Friday approved audit plan for income tax and sales tax under which thousands of taxpayers will be selected through random balloting by next week.
“FBR’s Board-in-Council has approved an audit plan for selecting 5 percent taxpayers’ through random balloting,” Chairman FBR Tariq Bajwa confirmed on Friday.
Instead of parameters-based audit, FBR took decision to hold audit on the basis of random balloting. The parameters-based audit was always challenged into different courts on different grounds so the FBR took conscious decision to avoid plunging into any legal battle.
Earlier, the Board-in-Council of FBR considered audit plan for selecting thousands of cases of Income Tax and Sales Tax for audit purposes.
“The audit is meant to create deterrence,” said one member of FBR and added that it would not give jumpstart to revenue collection. “We want to complete assessments till March 2014 so that we can materialize revenues in the current fiscal year,” added the official.
FBR had been facing difficulties to enforce audit plan in an effective manner from last several years because it was challenged into different courts on the basis of certain lacunas in the plan.
FBR has been facing a difficult task for achieving highly challenging tax collection target of Rs 2,475 billion in the current fiscal year compared to a collection of Rs 1936 billion in the last financial year. FBR will have to achieve a growth of over 28 percent in the ongoing fiscal for displaying its desired target.
FBR has already started sending notices to potential non-filers in a bid to broaden narrowed tax base. The government has made commitment with the IMF that the tax-to-GDP ratio will be increased by 5 percent in next five year tenure of PML (N) government.
“The bank access will be used carefully to broaden tax base,” said the official and added that the land transaction record of big giants was in the process of collection from all available avenues to find out new taxpayers.
FBR has planned to send 100,000 notices in the current fiscal year and so far these notices have been sent to around 30,000 people all over the country.
FBR had so far collected Rs 290.5 billion in first two months and few days of September 2013, registering a growth of just 17 percent compared to the same period of the last financial year.
This challenging task will become harder in the second and third quarter of the current financial year as FBR had performed well during the same period last year.
“In order to ensure effectiveness of the audit plan, FBR also decided to exclude certain areas from audit exercise such as salaried class, all those sectors where final tax liability is charged as audit of these sectors would not impact revenue side positively. So we decided to drop these sectors consciously in order to avoid wastage of time,” said the sources.
To track down progress on issued audit notices, FBR has already placed Tax Audit Management System (TAMS), enabling tax authorities to avoid misuse of any audit notice.