ISLAMABAD: At a time when the government is busy in introducing reforms in tax machinery, the Federal Board of Revenue (FBR) has picked as many as 12,553 cases of income tax, sales tax and federal excise duty (FED) for audit through electronic balloting.

Last year, 14,154 cases were selected for audit while in the previous year the number was 44,868.

The drop in number of cases selected for audit show that the FBR’s capacity to carry out audits.

Of the total cases selected for audit, 10,441 fall in the category of income tax, 2,065 in sales tax and 27 in Federal Excise Duty.

Adviser to PM on Finance Dr Hafeez Shaikh pressed the button for electronic balloting in the presence of FBR Chairman Javed Ghani and businessmen. The national tax numbers/CNIC’s of cases selected for audit have been displayed on the FBR website.

Majority are Income Tax filers followed by Sales Tax, FED

Shaikh said the selection of audit cases would be computerised.

He also explained that minimum number of cases are being selected for audit by focusing on only high-risk income tax, sales tax and federal excise duty cases so that audit can be completed appropriately and within time.

“This will also help in reducing the complaints of taxpayers about harassment and corruption”, he said adding that the exclusions in Audit Policy will minimise the undue hardships faced by taxpayers.

Shaikh also hoped that the FBR will continue to improve its standards by providing services to both government departments and taxpayers. He assured the business community of his full support and expressed hope that the future is more promising for the country’s business sector.

In order to further build up taxpayers’ confidence, two committees have been constituted for redressal of complaints against the FBR comprising of Business Committee including board representatives and business individuals and Technical Committee for complaints about refund matters that would also include representatives from private sector.

Chairman Ghani said the board is working on principles of transparency, simplicity and predictability.

He said that certain categories of taxpayers are excluded from selection — those picked up for investigations by the FBR Intelligence & Investigations Wing where income chargeable to tax under the head salary and/or pension exceeds 50 per cent of taxable income except cases having business income.

The chairman said directors of companies do not qualify for this exclusion.

All cases where entire income is covered under Final Tax Regime; declaration under the Voluntary Declaration of Domestic Assets Act; 2018, declaration under the Asset Declaration Ordinance, 2019 and federal, provincial and local government departments, have also been excluded.

The criteria for selection of cases (for all taxes) for Tax Year 2018 is risk based and parametric.

Cases have been selected using scientific approach for which a software has been designed and put in place named as “Risk Based Audit Management System” (RAMS).

This software empowers the FBR to focus on non-compliant taxpayers and thus facilitate compliant taxpayers to build confidence in the audit system.

Published in Dawn, September 19th, 2020