Taxpayers Will Now be Audited After Selection Using Computer Balloting

The Federal Board of Revenue (FBR) has approved Tax Audit Policy 2017 for the audit of the financial year 2016. According to the policy, audit cases would be selected based on certain risk parameters. The risk parameters for income tax have been kept confidential in accordance with the 214C (1A) of Income Tax Ordinance, 2001.

The selection of the cases will be done through computer balloting. A case selected during one ballot will be immune from selection for the next two consecutive tax years. FBR says that this has been done to facilitate the taxpayers.

The audit will be done for the tax period between July 2015 and June 2016.

Sales Tax Audit

The case selection for the Sales Tax audit will be parametric as well. Following parameters have been identified for the respective selection;

  • A decline in value of supplies is greater than 10% over last year;
  • Consistent decrease in output tax/input tax ratio over last three years;
  • Decrease in the ratio of taxable supplies to total supplies by 10% or more as compared to previous year;
  • Non-filer, nil-filer or null-filer for more than 6 months in the year in case the registered person is showing any turnover in income tax return of the corresponding period;
  • Manufacturers showing value addition of less than 10%;
  • Where more than 30% purchases are from “unregistered persons”;
  • Where more than 30% sales are to “unregistered persons”;
  • Increase in carry-forward of input tax and reduction in sales by a margin of 10%.

The risk-parameters for Sales Tax (Non-Corporate) are same as those mentioned above (Corporate).


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Federal Excise Audit

Following risk parameters will be incorporated for selection of cases under clause (i) of sub-rule (2) of rule 73A of the Federal Excise Rules, 2005.

  • A decline in value of supplies is greater than 10% over last year;
  • Consistent decrease in output tax/input tax ratio over last three years;
  • Decrease in proportion of taxable supplies to total supplies by 10% as compared to previous year;
  • Non-filer, nil-filer or null-filer for more than 6 months in the year, in case the Registered Person is showing any turnover in income tax return of the corresponding period;
  • Manufacturers showing value addition of less than 10%;
  • Where more than 30% purchases are from “unregistered persons”;
  • Where more than 30% sales are to “unregistered persons”;
  • Increase in carry-forward of input tax and reduction in sales by a margin of 10%.

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Currently, there are more than 925,000 audit cases pending before the FBR. After the parametric selection, FBR will pick out 7.5% of the total cases for audit.

Previously, Lahore High Court barred the government from implementing the policy calling it inconsistent with the law. The petition filed in the court highlighted that there were no identified risk parameters for selection of audit cases. Hence, it would give FBR an unprecedented and uncontrolled power to open any case they want without any probable cause.

This time the policy has been approved as it is inline with the law along with the identification of risk parameters, FBR says.

Via FBR


  • Muhammad Abrar Ali

    Chor ko Pakrrna hai to SCNIC k Sath Link kro Sary Bank Accounts aur Her chees jo Legal ho
    is se sab kujj Kam ho jay ga

    :/