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Robust audit essential to counter-check tax details: Bajwa

Robust audit essential to counter-check tax details: Bajwa

ISLAMABAD: Five per cent taxpayers selected from different categories would be issued notices for their detailed audits but the random selection of cases did not mean that all these persons or companies had evaded taxes, FBR Chairman Tariq Bajwa told Customs Today, while explaining the audit process.

Talking to this scribe, he said those who will receive notices for the audit purpose should not panic as FBR wants to countercheck whether they honestly declared their income and sales details in the returns or not.

“The difference between this exercise and the past ones is that this time fresh balloting has been conducted without the element of subjectivity,” said Bajwa. In the past, FBR used pre-determined parameters, which the taxpayers challenged in the courts, resulting in the failure of all such exercises.

FBR high-ups, he said, were aware that the taxpayers might again take FBR to the court but this time the mechanism devised is such that the authorities could defend themselves in any court of law.

He said FBR was implementing the Self-Assessment Scheme because it believed that the taxpayers would honestly declare their income and liabilities but a robust audit was essential to remind the taxpayers that they could be caught for giving misleading and incorrect information to tax authorities.

He said in addition to the cases selected through random balloting, FBR would also conduct desk audit in cases where the commissioners prima facie believed that the return filers under-declared their income and sales.

Bajwa said there was significant difference between tax collection and actual tax potential, and to minimise this gap FBR has planned three interventions. In addition to audit functions, FBR was also sending notices to potential taxpayers and to those who are taxpayers but did not declare their actual income. These interventions, he said, are expected to fetch minimum 13% additional revenues over and above the tax paid by the taxpayers.

Explaining the new audit strategy, FBR Chairman Tariq Bajwa said that Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) would issue system generated notices to the units selected for audit. Each electronic notice would contain specific bar-code for identification purposes. The electronic notices with the bar-codes would ensure transparency in the process of audit. If any registered person receives notice without bar-code, the same should be ignored. Such manual notices which are not system generated are not genuine and taxpayers should not respond to such notices.

Tariq Bajwa said that if people demand more services from the government then it is their duty to be more responsible in filing their tax returns as per their actual incomes. If more revenue is raised, the government could provide  basic amenities and services to the people. If fewer taxes are collected, government services would definitely be slashed too, he maintained. Due to less revenue and more expenditure, the government is compelled to borrow from the lending agencies like IMF and World Bank to meet its budget deficit. “We have to increase the tax-to-GDP ratio to get rid of huge borrowing and for this purpose we have to develop a tax culture in our country like other developed and neighboring countries”, he maintained.

Bajwa told Customs Today that FBR keeps every aspect of revenue collection in view and this is an effort and a step forward in this regard. He said that Board-in-Council had already decided that government departments are exempted from the audit but not the corporations.

In an answer to a question, he said that the taxation and tax filing system would also be made easier so that everyone can file tax returns even online. He said that now FBR is making it possible that commercial electricity and industrial gas bills also come under sales tax registration.

Customs Today correspondent also talked to Member FATE and FBR spokesperson Ms. Riffat Shaheen Qazi regarding audit plan. She said that the balloting system is completely transparent and FBR has tried hard to make it possible that this system does not harm anyone.  As a routine when taxpayers audit starts, “we send notices to the selected persons and ask them for submitting their tax details as per their actual incomes.” It will be a kind of deterrent but does not bar the process of Article 177 under which audit cases are dealt by the commissioners.

Member Taxpayers Audit Haroon Tareen said that balloting was a transparent procedure and the Board had made some exemptions in it and even excluded some major cases to make it more flexible for taxpayers.

Member Administration Shahid Hussain Jatoi said that the balloting was highly transparent. The audit process would bar the taxpayers from filing wrong returns.

Talking exclusively with Customs Today, President Islamabad Chamber of Commerce and Industry Zafar Bakhtawari said that the process for taxpayers’ assessment is completely transparent due to the automation of system and the random computerized selection of cases

He said that we have no objection to the method adopted by FBR but the selection of 5pc of the total taxpayers is a large number and does not go with the spirit of self-assessment and universal assessment schemes. FBR could achieve its gigantic tax target through a soft approach, he added.

President Rawalpindi Chamber of Commerce and Industry also told Customs Today that the balloting seems transparent and there is no reason of doubt its authenticity