LAHORE: Audit ranges of Large Taxpayers Unit (LTU) conduct transparent audits and complete scrutiny of taxpayers to create legitimate demand and meet the budgetary targets assigned by the Federal Board of Revenue (FBR).
This was stated by LTU Zone-I, Unit 02 Deputy Commissioner Sahar Aftab while talking to Customs Today during an interview.
She said that primary function of audit unit is to conducts desk audit of taxpayers on the basis of information in tax returns/audited accounts and wealth statements (in case of directors). “If during the desk audit any discrepancies are found, the desk audit report comprising risk areas will forward to zonal commissioner for selection of case for audit under relevant provisions of law,” she highlighted.
Talking about the jurisdiction, Sahar informed that she dealt with the sectors of cement, electronics, textiles and some miscellaneous cases. She further said that seven cement companies fell under the jurisdiction of LTU and these were the major revenue yielding cases. She added that D.G Cement, Maple Leaf Cement, Kohat Cement and Gharibwal Cement were the main tax contributors to the Zone-I.
She discussed the selection procedure for audit that major chunk of the company cases were selected for audit by the FBR through random balloting for income tax, sales tax as well as for federal excise duty. Besides FBR selection, Inland Revenue (IR) commissioner is also empowered to select cases for audit based on high risk areas, she added. After selection under relevant provisions of law, the cases are then assigned to the deputy commissioners for conducting audit proceedings. It is pertinent to mention that all the correspondence with the taxpayers is done through bar coded notices in software like TAMS and IRIS, she said. Currently, 44 audit cases of her jurisdiction are pending among which majority cases are in litigation before the Lahore High Court (LHC), she said.
The deputy commissioner said that after separation of corporate and non-corporate RTOs, the cases of directors of the companies have also been assigned to her jurisdiction. “The audit units have now initiated scrutiny of wealth statements/returns of these directors and it is hoped that it would be a potential area with reference to revenue generation,” she explained.
On answering question about disposal of cases, Sahar said that audit units were assigned targets for disposal and demand creation. Audit units made efforts to dispose of cases frequently but due to litigation and stay orders by the courts some cases got delayed, she added. Conducting audit was a time-consuming procedure, and with limited staff of one inspector and one audit officer, the task became more difficult, she said.
Talking about the audit procedure, Sahar told that audit wing collected soft data/hard data from the taxpayers and then scrutinised it. Discrepancies were then confronted to the taxpayers and their explanations are sought on the issues, she said, adding that sales tax audit was mostly done at the premises of the taxpayer.
She also informed, “Visiting the manufacturing concern of the company for audit purpose gives a fair idea about the company’s working”. In case of cement sector, the FBR has selected composite audits (both income tax and sales tax) of some companies. She further told that compliance rate of majority of taxpayers of LTU was good but still there were some variations, especially when it came to audit.
Sahar Aftab further told that she also conducted post-refund audits and pre-refund audits under the relevant sales tax rules. Some investigative audits under Section 38 of the Sales Tax Act, 1990 have also been initiated by her unit. During the audit proceedings, the LTU officers ensured third party verification in some cases to examine income and expenditures details of taxpayers according to their declarations in order to find the true liability in the case, Sahar added.
Sahar Aftab concluded that the LTU showed outstanding performance in audit and achieved assigned targets under the leadership of LTU chief commissioner, while zonal commissioners and additional commissioners also played vital role in tax collection as well as creation of current demand.
