The Federal Board of Revenue (FBR) has said that the government has facilitated the taxpayers by providing them with a one-time option for closing the audit proceedings due to the late filing of returns through the Finance Supplementary (Amendment) Act 2018.
The FBR denied the news reports appearing in a section of media accusing tax authorities of subjecting late filers to harassment, especially the salaried individuals.
The Board said that the assertion by the media that the FBR is pressurizing taxpayers for additional revenue through the recovery of penalties shows a lack of understanding of tax laws and their true intent.
The Board clarified that an amendment to income tax law made through Finance Act 2015 by the previous government provided for automatic selection for audit if a person had not filed the return of income by the due date stipulated under the law.
It said that through Finance Act 2018 this amendment was withdrawn, however, the cases that were automatically selected under the said provision prior to its withdrawal were still to be audited. This created a lot of problems for the taxpayers and also resulted in a large pendency of audit cases. Therefore, in order to facilitate the taxpayers, the present government provided a one-time option to the taxpayers for closing the audit proceedings due to the late filing of returns through the Finance Supplementary (Amendment) Act 2018.
Under the Finance Supplementary (Amendment) Act 2018, taxpayers were provided with an option to get their audits closed on the payment of either 25 percent higher tax than the tax paid with the return or in case no tax was payable 2 percent of the turnover and to file revised return by 31-12-2018.
The salaried individuals, whose cases were selected for audit due to the late filing of returns, were facilitated by exempting them from the requirements of paying 25 percent higher tax and filing revised returns for the closure of their audit cases. They, however, are required to pay only the penalty on account of delay in filing of return in order to get their audit cases closed, the Board clarified.
It is worth mentioning here that the previous government had fixed the minimum penalty for late filing of return at Rs 20,000 through the Finance Act 2013 and no change was made by the present government.
It is imperative to understand that the penalty proceedings are independent of the audit, which will be applicable regardless of whether the taxpayer avails the benefit under the above-mentioned provision of the Finance Supplementary (Amendment) Act 2018 or not.