Loss declaring taxpayers may be excluded from USAS

The Federal Board of Revenue (FBR) is reviewing a budget proposal to exclude loss declaring companies, Association of Persons (AOPs) and individuals from the purview of the Universal Self Assessment Scheme (USAS) from next budget (2011-12). Sources told Business Recorder here on Friday that a few Chief Commissioners have asked the FBR to check the misuse of the USAS by companies and other categories of the taxpayers, who deliberately declare losses.
The proposal is to exclude all such loss making/declaring units from the purview of the USAS for conducting audit of all such companies and taxpayers. Such loss declaring units may be excluded from the USAS and their compulsory audit be conducted to check the authenticity of the information provided by the taxpayers. The FBR is examining such procedural changes in the Income Tax Ordinance 2001 on the basis of budget proposals of the Chief Commissioners. The loss making companies must be subject to audit through changes in the USAS, sources added.
Another official said that the FBR seemed to be not interested to change the self-assessment scheme, which is a basic reform introduced for the taxpayers. The Board had already dropped the budget proposal to introduce a change in the USAS of the Income Tax Ordinance 2001 by restricting the USAS to only regular filers of income tax returns and statements and non-filers should be excluded from the self assessment scheme. The FBR has not accepted budgetary proposal to amend the USAS by excluding non-filers or later filers from the self assessment scheme. The FBR will not touch the USAS in the upcoming budget (2011-12) and the proposal to exclude non-filers from the USAS has not been accepted.
It is important to mention here that at present the returns filed in response to notices are accepted under the self-assessment scheme. On the other hand, there is no specific restriction on the late filers of returns under the USAS. The main rationale behind this proposal is that if a person is not compliant under the self-assessment scheme, he should be excluded from the USAS and the return should not be automatically be accepted by the tax department.