The Federal Board of Revenue (FBR) has identified over 24 leading sectors, including automobiles, power companies, banking, service providers and telecommunication companies, for sales tax and income tax audit for tax year 2010.
Sources told Business Recorder here on Saturday that the sectors selected for composite audit of sales tax and income and non-composite audit include pharmaceutical manufacturers, banking sector, manufacturers of automobiles, power companies and service providers. Other sectors subjected to audit included beverage manufacturers, textile units, sugar factories, manufacturers of paper and paper products, hotels/restaurants, cement units and manufacturers of cigarettes, tobacco and related products.
The sectors picked for composite audit of sales tax and income and non-composite audit also include petroleum products, telecom companies, chemicals, services sector and electronic products/goods. Within the POL sector, units dealing in POL products including petroleum exploration and production companies could be selected for audit. Besides, sales tax and income tax audit would also be conducted of sectors covering fertilisers and pesticides and companies dealing in the food and food products. The manufacturers of leather products and iron and steel sector would also be subjected to audit for tax year 2010. The FBR has also picked manufacturers of plastics products and manufacturers of medicines and drugs for sales tax and income tax audit for tax year 2010.
According to sources, the FBR has issued instructions to all Chief Commissioners of Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) for selection of cases for audit from the above-mentioned sectors taking into account the selection criteria already communicated to the field formations. The selection of sectors has been done by the FBR Taxpayer Unit Wing on the basis of tax profiles of registered units and trend of payment of taxes in different sectors. The taxpayers would be picked for audit from sectors identified by the Board to check trends in payment of sales tax and income tax in top sectors of the economy.
The FBR has also directed the Chief Commissioners of LTUs and RTOs that the taxpayers falling within the category of the Association of Persons (AOPs) would be selected for audit from these 24 sectors in the field formations. The Chief Commissioners of LTUs and RTOs would follow the 'National Annual Audit Plan 2011-12' for carrying out audit of income and sales of taxpayers including associations of persons, FBR's instructions added.
The LTUs would select 30 percent of the taxpayers including withholding agents for audit, RTOs seven percent companies cases including withholding agents and RTOs would also pick 5 percent non-company cases, including AOPs and 'business individuals' and withholding agents. The LTUs/RTOs have also been empowered to select 20 percent of total cases selected for audit on the basis of local knowledge. The cases for audits shall mainly be selected by the Commissioners based on the risk factors developed by FBR. However, he may also select cases for audit on the basis of his local knowledge. The number of such cases must not exceed 20 percent of the total cases selected for audit.
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