Pending tax audit cases increase to one million: PTBA

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SOURCEFinancial Daily
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KARACHI: Pakistan Tax Bar Association (PTBA) has said the backlog of cases selected for audit increased to around one million.

Federal Board of Revenue (FBR) needs to take immediate remedial action for disposing of the cases.

In a letter to FBR Chairman, the PTBA said that the association believed approximately one million cases presently are pending for disposal selected for audit.

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The bar said that there is large number of those taxpayers who had filed return for the first time.

Section 214D of Income Tax Ordinance, 2001 – under which cases were selected for audit said by the tax bar.

Where income tax returns were not filed by due date – had played negative role in broadening of tax base; however the section has been omitted through Finance Act, 2018.

Tax amnesty scheme: Major issues resolved, claims FBR official

In order to achieve the objective of fair and equitable disposal of pending cases; the tax bar made following proposals:

1. Sub-section (3) of Section 214D of the Ordinance provides that subject to Section 182, 205 and 214C sub-section (1) shall not apply if the person files the return during 90 days interval from the date as mentioned in sub-section (1) and

a. 25 percent higher tax, than the tax paid during immediately preceding tax year, has been paid by a persons on the basis of taxable income and had declared taxable income in the return for immediately preceding tax year, or

b. Tax at the of two percent of the turnover or the tax payable under Part 1 of the First Schedule, whichever is higher, has been paid by a person along with the return and in the immediately preceding tax year has either not filed a return or had declared income below taxable limit.

Provided that where return has been filed for the immediately preceding tax year, turnover declared for the tax year is not less than the turnover declared for the immediately preceding tax year.

The tax bar said that keeping in view the above instructions of law, the condition of filing of return income of ninety days will eventually be condoned under section 214A of the Ordinance.  Meanwhile, date for filing of returns should be July 31, 2018 in those cases who fulfil the conditions provided under Sectio 214D(3)(a) and (b) of the Ordinance/

However, in case of first time filers, the option may also be provided to them subject to additional payment of 25 percent of tax payable or two percent of the turnover, whichever is higher for the tax years.

The audit of income tax affairs of the taxpayers who derive income under the following heads of income or nature of income should be closed after proper desk audit:

a. Income from salary;
b. Income from property;
c. Capital gains;
d. Income from dividend;
e. Income from debt;
f. Nil income cases; and
g. Income covered under the presumptive/fixed tax regimes.

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