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KARACHI: Expressing concern over the existing auditing system, the Karachi Tax Bar Association (KTBA) on Monday urged the Federal Board of Revenue (FBR) to take all stakeholders on board before finalising a new national audit plan.
The bar pointed out that the existing audit system was being widely misused by FBR field officers who harass taxpayers, and it results in a trust deficit between tax collectors and taxpayers.
The bar stated that there were reports that a new national audit plan was being formulated, but none of the stakeholders, including the KTBA, had yet been consulted.
'Audit of taxpayers is important, but it is equally important that it should strictly be made in accordance with provisions of law laid down under the Income Tax Ordinance 2001 and Sales Tax Act 1990,' the bar asserted.
The KTBA president, Anwar Kashif Mumtaz, told Dawn that field officers were negating the spirit ofUniversal Self Assessment Scheme (USAS) as envisaged under Income Tax Ordinance 2001 and Sales Tax Act 1990.
Mr Mumtaz suggested that results of previous audits be evaluated and their fate in appeals be also examined to draw an exact picture about what was going on in field offices under the existing audit system.
There was no reason why the country had failed to improve tax-to-GDP ration which stands lowest at 8.5 per cent, he added.
The KTBA, he said, had raised such issues with the FBR on a number of occasions and even drew attention towards the damaging behaviour of field officers which was hurting the reforms process.
Mr Mumtaz suggested that if a taxpayer's audit case is selected for the next two fiscal years, it should be excluded.
Presently a large number of discrepancies have been unearthed during the course of the audit, he added.
The new audit plan, he said, should ensure that field officers strictly adhere to provisions of Section 177 of the Income Tax Ordinance 2001.
And on selection of cases for audit, sufficient time be given to taxpayers to file an explanation, and in case taxpayers fail to give convincing explanations, only then audit proceedings be initiated against them.
He asked the FBR to only select cases for audit for the tax year 2011 because nowhere in the world, cases from previous years are selected for audit until unless some major discrepancy or concealment is deducted.
Anwar Kashif Mumtaz was critical of the multiple audits being presently carried out, such as withholding tax audit, sales tax, refund audit of sales tax, normal income tax audit etc.
All these multiple audits, he said are counter-productive.
He demanded that FBR should strictly monitor audit proceedings and give sense of justice to taxpayers by not selecting one taxpayer for more than one year for audit purpose.
