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Audit Poicy 2019: FBR grants audit immunity to salaried persons, pensioners

Audit Poicy 2019: FBR grants audit immunity to salaried persons, pensioners

ISLAMABAD: Federal Board of Revenue (FBR) has granted audit immunity to salaried individuals and pensioners for income declared/ return filed for tax year 2018.

The FBR issued Audit Policy 2019 and announced exclusion from audit to certain classes of taxpayers.

The FBR said that all cases where income chargeable to tax under the head of salary and / or pension exceeds 50 percent of taxable income should be excluded from income tax audit. The FBR said that directors of companies would not qualify for the exclusion.

The FBR also excluded persons falling under final tax regime from audit selection.

The FBR said that under Audit Policy 2019 those cases would not be selected, which were already selected for audit by commissioner Inland Revenue and Director Intelligence and Investigation (I&I) (IR) under Section 177 and in consequence of action under section 175 of the Income Tax Ordinance, 2001 for tax year 2018.

The FBR further said that those cases would not be selected where declaration had been made under the Voluntary Declaration of Domestic Assets Act, 2018. Further, those cases will also not be selected where declaration has been made under the Asset Declaration Ordinance, 2019.

The FBR said that Audit Policy 2019 would apply to persons or classes of persons falling under all or any of the three domestic federal tax statutes i.e. Income Tax Ordinance, 2001, Sales Tax Act, 1990, and Federal Excise Act, 2005 and shall provide the necessary framework for selection of cases for audit by the Board.

The FBR further said that the for the purpose of selecting cases for audit through risk based approach by conducting computer ballots, the policy be effective for tax year 2018 for Income Tax and corresponding tax periods for sales tax and federal excise.

The FBR said that it would conduct computer ballot by applying risk based parameters for selection of 0.76 percent of cases for audit out of the total filers after exclusions in Income Tax for the tax year 2018.

For sales tax and federal excise, the FBR would select 1.67 percent and 5.65 percent cases for audit respectively out of the total filers after exclusions for tax period corresponding to accounting period adopted for the purpose of returns for income tax for tax year 2018.

However, the FBR has limited the audit cases selected without the risk-based system to 10 percent of total audits subject to clearance by Member (Taxpayers Audit).