ISLAMABAD: The field officers supported by the IT experts of PRAL are speedily finalizing the process of field-based withholding system of consumers’ tax deducted and deposited by the telecom companies.
The field officers comprising six members are conducting this process under the Income Tax Ordinance, 2001 for the quarter July – September, 2017, at company’s premises. After the finalization of the procedure, official source at FBR told Customs Today that the team would prepare its findings in the form of a report and submit to the FBR’s relevant wing. The concerned wing/ department sort out discrepancies in the system committed by telecom companies and proposed action as per relevant provisions of the law, wherever discrepancies would be found.
The source told that taxes collected /withheld by cellular companies was deposited in the national exchequer and the same was declared in their monthly withholding statements. The monthly withholding statements filed and tax deposited is reconciled in terms of applicable withholding income tax rates and the total revenue reflected in the audited accounts of the taxpayer, and if a discrepancy is found, the action is taken under relevant provision of the Income Tax Ordinance, 2001.
To a question about parameters for the selection of a company for tax audit, the source told that selection was done by both the concerned commissioner and Federal Board of Revenue (FBR) on the bases of risk parameters approved by the Board. The audit of cellular companies is conducted subject to selection of case under relevant law.
“After selection of case for audit, the Audit Manual prescribes a pre-audit conference with the taxpayer in which scope of audit and time line for completion of audit is decided. Consequently Information Document Request (IDR) is issued for seeking relevant records and information from the tax payer” the source said.
After obtaining books of accounts and documents provided by the taxpayer” the source told that an audit report was prepared, and if required, a post audit conference was again conducted with the taxpayer to apprise the taxpayer of the legal and factual discrepancies. Thereafter, a statutory notice to amend the deemed assessment order (on the basis of return submitted by the taxpayer) is issued to provide a lawful opportunity of being heard to the taxpayer.
“After affording such an opportunity to the taxpayer, an amended assessment order is passed containing discussion and findings on the outcome of audit including enhancement of income etc., is served upon taxpayer along with tax demand notice” the source maintained.
To a question about aspects kept in mind by the team while scrutinizing the account of the Telecom companies, the source said that field officers’ team kept the some specific aspects in mind of tax affairs of a taxpayer while scrutinizing the books and documents of the Telecom companies including verification of withholding taxes with respect to disallowances of expenses, examination of genuineness of liabilities declared in the balance sheet, verification of the input tax claimed and verification of all taxable supplies whether the same had been charged to sales tax or not.
” Moreover, transactions with associates are measured at Arm’s Length standard; admissibility of depreciation and amortization expenses is verified in accordance with section 22, 23 and 24 of ITO, 2001″ the source observed adding that admissibility of P/L expense was verified in view of the provisions of section 20(1) / 174(2) of the ITO, 2001.
