National Audit Plan: targets given to RTOs and LTUs halved

The Federal Board of Revenue has made a reduction of 50 percent in the targets assigned to the Large Taxpayer Units and Regional Tax Offices for carrying out income tax and sales tax audit of corporate sector, Association of Persons (AOPs), business individuals and withholding agents for Tax Year 2010 under the National Annual Audit Plan 2011-12.
Sources told Business Recorder here on Monday that the FBR has made 50 percent reduction in selection of total number of cases for audit due to inability of the FBR Taxpayer Audit Wing to meet the assigned targets under the ''National Audit Plan 2011-12''. The FBR will issue instructions to the field formations here on Tuesday (Dec 27) for 50 percent reduction in the number of cases for income tax and sales tax audit for Tax Year 2010. In this connection, the FBR has revised the methodology for selection of cases for audit under the Tax Year 2010.
According to the revised policy under the ''National Audit Plan 2011-12'', sources said that directions to be issued to field formations to limit the selection of cases for audit for the Tax Year 2010 to 50 percent. The remaining 50 percent cases should be selected directly by FBR through computer ballot on the basis of approved risk criteria before January 1, 2012.
In order to implement this decision, a team of officers (Tax Audit Task force) shall work under Member (Taxpayer Audit), who will identify the risk parameters, select cases for audit and monitor their progress. The selection of cases by this team shall be completed by December 31, 2011 and rolled out wef January 1, 2012.
Sources said that as per ''National Audit Plan 2011-2012'', the targets for audit coverage as against the number of income tax returns received for the Tax Year 2010 and corresponding tax periods of sales tax and federal excise were fixed for the LTUs/RTOs on August 30, 2011. The LTUs were assigned to select 30 percent of the taxpayers including withholding agents (Tax Year 2010) for audit, RTOs seven percent companies cases including withholding agents and RTOs were assigned target to 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 the total cases selected for audit on the basis of local knowledge.
Following 50 percent reduction in selection of cases for income tax and sales tax audit for Tax Year 2010, the LTUs/RTOs would correspondently reduce the percentage of cases to be selected for audit under the new development.
Under the ''National Annual Audit Plan 2011-12'', sources said 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. Keeping in view new development here on Monday, the 50 percent reduction would also affect cases where Commissioners can exercise their discretionary powers, sources added.