KARACHI: Federal Board of Revenue (FBR) is likely to recommend amendments into a law related to auditing of non-filers as it faces capacity constraint to handle burgeoning audit cases, official said on Thursday.
The officials said the FBR is revisiting automatic selection of audit as there is a huge pendency of audit cases which have ballooned to above 600,000.
The introduction of annual audit policy, which was to be launched in November 2017, was also delayed due to pendency of cases, they added.
“The FBR may recommend amendment to the ordinance through Finance Bill 2018 to either withdraw or put a threshold for automatic audit selection,” a source in Regional Tax Office, Karachi said. A section (214D) was inserted into the Income Tax Ordinance 2001 through Finance Act 2016 in order to encourage income tax returns filing.
Under the section, taxpayers who fail to file annual income tax returns till the last date announced by the FBR will automatically be selected for audit. All the non-filers for tax year 2015, 2016 and 2017 were included in the audit list after the introduction of the provision.
But, the cases are separate from those that are separately selected by the FBR through random computer balloting and selected by Commissioner Inland Revenue.
FBR has several other options to bring potential taxpayers into the tax net and to enforce returns filing. The board has already launched monitoring of withholding taxes to identify potential taxpayers. Besides, it has also set up units in three major cities, which will be expanded to other cities as well, to broaden tax base.
Officials said there are numerous taxpayers who have no income, but they are filing their returns in order to avoid high withholding tax rates on purchase of motor vehicles and properties. A non-filer has to pay withholding tax on non-cash banking transactions under a law to encourage returns filing.