ISLAMABAD, March 22: The International Monetary Fund (IMF) has recommended to the Central Board of Revenue to draw up an effective audit programme for the income tax returns 2003 to realise maximum revenue following the implementation of full self-assessment scheme from the next financial year.

Official sources told Dawn on Saturday the CBR would finalize the audit strategy, detailed policy and procedures by June 15, 2003, which would include a strategy for audit case selection, supported by a comprehensive system of third party information, which was required to support the audit programme.

According to the IMF recommendations, the tax authorities would initiate action to design the 2003 audit programme, which would cover resources, policies, procedures and management arrangements and to take steps to disseminate the new arrangements to key personnel in all regions.

It was proposed that a system of information reporting and matching would need to be devised in the medium term, and priority should be given to interest income reporting.

For this the Fund said that the tax authorities would have to take steps over the medium term to develop arrangements for systematic third party information gathering to support the audit programme.

It was also recommended to amend the income tax ordinance 2001 and if needed the banking laws requiring systematic reporting by financial institutions of all interest payments above a prescribed threshold and mandate the reporting of such information to include a taxpayer identification number, NIC number and made in electronic format.

It was observed that the effectiveness of the audit programme needed drastic improvement, which should be addressed at the earliest.

It was proposed to analyze the high proportion of “nil” audits to determine what might be done to improve the quality/integrity of audits and the effectiveness of audit selection.

It was recommended to the CBR to train auditors from sales tax and income tax in the application of indirect methods of tax determination and launch a coordinated campaign to identify and assess tax liabilities of persons with inadequate business records.