Measures proposed to reduce pending audit cases

KARACHI: Federal Board of Revenue (FBR) was urged to speed up settlement of audit cases that piled up to more than one million.

Pakistan Tax Bar Association (PTBA), in a letter to FBR Chairman Tariq Mahmood Pasha, stressed the need for disposal of cases automatically selected for audit under Section 214D of the Income Tax Ordinance 2001 for tax years 2015 to 2017.

The PTBA also recommended payment of certain amount of taxes for disposal of audit cases, falling under other provision of income tax law.

The tax bar said around one million audit cases are pending for disposals.

A large number of taxpayers, who filed income tax returns for the first time, were automatically selected.

The Section 214D, which was introduced three years ago, was abolished through the Finance Act 2018.

Under the law, taxpayers who fail to file their income tax returns would

automatically be selected for audit.

The tax bar said an individual should not be selected for audit if he pays 25 percent higher tax than the tax paid during immediately preceding tax year.

The taxpayers should be allowed to pay tax at the rate of two percent of the turnover in order to avoid selection of audit.

The Pakistan Tax Bar Association said an option should also be provided

to first-time filer to pay 25 percent additional tax or two percent of the turnover, whichever is higher for the tax years 2015 and 2017.

The tax bar said audit cases should be closed if income is derived from salary, property, capital gains,

dividend and debt or if income is covered under the presumptive and fixed tax regime.

The tax bar said the measures would help in disposal of a heap of audit cases as well as lead to a reasonable amount of revenue.