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.
The case selection for the Sales Tax audit will be parametric as well. Following parameters have been identified for the respective selection;
The risk-parameters for Sales Tax (Non-Corporate) are same as those mentioned above (Corporate).
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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.
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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