ISLAMABAD: The auditors’ inaccessibility to income tax data has made audit a difficult process and hampered the desired performance of the organisation.
The Taxpayers Audit wing of the Federal Board of Revenue (FBR) has to write to different departments and wings for the provision of data of taxpayers for auditing purpose.
Therefore, the FBR is required to enhance access of Taxpayers Audit to income tax, sales tax and customs duty data to get the desired performance as well as timely settlement of tax-related cases.
The Taxpayers Audit wing of the FBR has been assigned the job to plan and design audit procedures, evaluate tax audits for all domestic taxes, devise and implement Annual National Audit Plan as well as to prepare selection criteria for audit coverage of high-risk areas.
It is also tasked with spearheading the process of developing audit methodology to assure audit quality, exercise powers and functions of the board under Sales Tax Act 1990, Income Tax Ordinance 2001 and Federal Excise Act 2005, as delegated by the board, and to perform any other duty or task assigned by the FBR chairman.
Furthermore, monitoring the selection and processing of cases for audit under Section 25 of the Sales Tax Act, 1990, Section 177 of the Income Tax Ordinance, 2001 and Section 46 of Federal Excise Act, 2005 are also are also done by this wing.
Presently, the percentage of collection of sales tax is higher than income tax and others in the total revenue collection because zero tax rating on several sectors was removed in the previous finance bill and now the government is planning to further cut the number of zero rated sectors in the coming budget for the fiscal year 2015-16.
Although customs duty was levied on almost every imported item in the fiscal budget 2014-15 – which increased the total volume of customs duty by 50% – the percentage of total revenue collected from customs duty is still less in Inland Revenue despite this massive increase.
This is mainly because the corporate tax has been cut by one percent every year, which is now at 33 percent
Main progressive tax is income tax which burdens the rich but increased customs duty and corporate tax burden the end consumers; therefore, income tax collection must be paid special attention to reduce the burden of the people.
In the situation, renowned commercial units commit tax evasion in routine without any check and balance just because the auditing process of taxpayers is full of flaws.
For example, 25,000 tax audit cases were selected last year and distributed among different RTOs who completed scrutiny of 80 percent of the cases but their quality of order was not up to the mark, because officers had no access to all required data.
If the FBR wants to see an effective organisation it has to improve income tax, taxation system and integrated system which will automatically improve the customs duty and income tax systems, and then the FBR would not be required to levy new taxes.
Last month, Taxpayers’ Audit Member Syed Ijaz Hussain paid a surprise visit to Regional Tax Office, Faisalabad and reviewed the progress on disposal of audit cases pertaining to tax year 2013 and earlier.
He noted that the disposal of audit cases for tax year 2013 lagged behind the assigned target of 40 percent up to 31.12.2014, and directed the commissioners and audit officers to expedite finalisation of cases, especially minor cases.
He called upon officials to formulate a comprehensive strategy for achieving up to 65 percent of the target of disposal of cases by 31.03.2015.
The member also urged the audit officers to prioritise the cases starting with disposal of minor cases and also focus on revenue potential cases so that substantial creation and collection of demand can be ensured.
The member urged the audit officers to prepare and follow a personal roadmap for disposal of cases and maintain a diary of progress in the cases assigned to them. The commissioners and audit officers assured the member of putting extra efforts for expeditious disposal of cases as per given targets and timelines.
