FBR notifies tax auditing selection

KARACHI: The Federal Board of Revenue (FBR) announced on Monday that it has the authority to exclude any person or classes of persons from the income tax auditing selection. 

“However, such exclusions will be publicised on FBR’s web portal prior to the process of balloting or selection,” the FBR said in a notification.

The notification said the audit cases will be selected in accordance with the predetermined percentage in line with the amendments in the Income Tax Rules, “to be publicised through FBR's web-portal, and immediately after computer ballot, the lists of selected case will placed on FBR's web-portal.”

“The whole balloting system for audit selection will be based only on the NTNs/CNICs (national tax and computerised national identity card numbers) of the filers and the cases selected for audit will be communicated to concerned RTOs (regional tax offices) and LTUs (large taxpayer units) as per their respective jurisdictions,” it said. 

“As far as selection of cases on parametric basis is concerned, these may be based upon financial ratios for the year vis-à-vis the history of the case; financial ratios vis-à-vis industrial, sectoral or national ratios; industrial comparisons or bench marks; quantum of losses or refunds beyond certain thresholds and compliance history.”

The notification said the selection will be made in the presence of representatives from chambers of commerce and industries and tax bar associations.  “The taxpayers to be audited are bound to provide prescribed books of accounts, support information and documents, access to computerised data or provision of attested hard copies of computerised data,” it added.

“On completion of examination of books of accounts, the discrepancies, if found, will be intimated to the taxpayer for obtaining taxpayers’ explanation, in the form of audit report, seeking taxpayer’s explanation on these points.”