FBR approves Audit Policy 2016

SOHAIL SARFRAZ

ISLAMABAD: The new Audit Policy 2016, approved by the Federal Board of Revenue (FBR) here on Wednesday for selection of taxpayers for audit, would also include those cases in parametric selection process which were earlier selected for audit last year.

Sources told Business Recorder here on Wednesday that the FBR approved new Audit Policy 2016 during meeting of the Board-in-Council held at the FBR House here on Wednesday. A major policy shift in the new audit policy is that the exclusions from audit selection have been reduced under the new Audit Policy 2016. Certain categories which were excluded from audit last year, have now been included in the parametric selection process for audit.

For example, if a case has been selected during the last year, the same may again be picked for audit this year under parametric audit selection. The old case could again be picked for audit.

It has been decided that the parametric audit selection of cases would be carried out under new Audit Policy 2016.

Under the last year's audit policy, certain exclusions were identified and approved by the Board which pertain to cases where audit was not required.

The exclusions from audit for tax year 2014 included:

Income Tax Corporate Returns: All person(s) whose entire income is exclusively subject to Final Taxation under the provisions of law as mentioned in sub-section (4) of Section 115 of the Income Tax Ordinance, 2001; all cases where no business is stated to have been conducted for the relevant tax year and no sales/ receipts have been declared; all cases already selected for audit for Tax Year 2013 by the Board U/S 214C; all cases already selected for audit by the CIRs for Tax Year 2014 under section 177(1) of the Income Tax Ordinance, 2001 and all cases qualifying for exemption from audit under clause (88) of Part IV of the Second Schedule to the Income Tax Ordinance, 2001 (notwithstanding the omission of said clause through Finance Act, 2014).

Income Tax Non-Corporate Returns: All person(s) whose entire income is exclusively subject to Final Taxation under the provisions of law as mentioned in sub-section (4) of Section 115 of the Income Tax Ordinance, 2001; all cases where no sales/ receipts have been declared; taxable income from salary only; taxable income from share from AOP only; cases of pensioners drawing exempt income from pension; cases declaring foreign remittances only; all cases already selected for audit for Tax Year 2013 under section 214C of the Income Tax Ordinance, 2001; all cases already selected for audit by the CIRs for Tax Year 2014 under section 177(1) of the Income Tax Ordinance, 2001; all cases qualifying for exemption from audit under clause (88) of Part IV of the Second Schedule to the Income Tax Ordinance, 2001 (notwithstanding the omission of said clause through Finance Act, 2014) and case(s) of persons(s) where one or more of the above exclusions apply.

Sales Tax Corporate: Null Return filers, federal, provincial and Local Government Departments; all cases of Steel Melters, and Steel Re-rollers who are paying sales tax under the Sales Tax Special Procedure Rules, 2007; all cases of Commercial importers only having no business other than commercial import business and who are paying 3% value added sales tax; all cases already taken up for audit for Tax Period(s) July 2013 to June ,2014 under section 25 ,and 38 of the Sales Tax Act , 1990 and all cases already selected for audit for Tax Period(s) July 2012 to June, 2013 under section 72B of the Sales Tax Act, 1990.

Sales Tax Non-Corporate: Null Return filers; Federal, Provincial and Local Government Departments; all cases of Steel-Melters, and Steel Re-rollers who are paying sales tax under the Sales Tax Special Procedure Rules, 2007; all cases of Commercial importers only having no business other than commercial import business and who are paying 3% value added Sales Tax; all cases already selected for audit for Tax Period(s) July 2013 to June ,2014 under section 25 ,and 38 of the Sales Tax Act , 1990 and all cases already selected for audit for Tax Period(s) July 2012 to June, 2013 under section 72B of the Sales Tax Act, 1990.

FED Corporate/ Non-Corporate Returns: Null Return filers; federal, provincial and Local Government Departments; all cases already taken up for audit for Tax Period(s) July 2013 to June, 2014 under section 46 of the Federal Excise Act,2005 Act ; all cases already selected for audit for Tax Period(s) July 2012 to June, 2013 under section 42B of the Federal Excise Act, 2005.

The scope of exclusions provided was restricted to cases to be selected for audit u/s 214C of the Income Tax Ordinance, 2001, Section 72B of the Sales Tax Act, 1990 and 42B of the Federal Excise Act, 2005.