Federal Board of Revenue has approved the Audit Policy, 2019 pertaining to Tax Year 2018. The Audit Policy, 2019 shall apply to persons or classes of persons falling under all or any of the three domestic Federal Tax Statutes i.e. Income Tax Ordinance 2001, Sales Tax Act 1990, and Federal Excise Act 2005.
FBR has added that criteria for selection of cases (for all taxes) for Tax Year 2018 would be parametric. Cases will be selected on scientific approach for which a software has been designed and put in place named as “Risk Based Audit Management System” (RAMS). This will enable FBR to focus on cases with maximum non-compliant taxpayers while facilitating compliant taxpayers and building the confidence of taxpayers in the Audit system.
FBR would shortly conduct computer ballot by applying Risk Based Parameters for selection of 0.76% of cases for audit out of the total filers after exclusions in Income Tax for the Tax Year 2018. For Sales Tax and Federal Excise Duty, the FBR would select 1.67 % and 5.65 % cases for audit respectively out of the total filers after exclusions for tax periods corresponding to accounting period adopted for the purpose of returns of Income Tax, for Tax Year 2018.
In order to facilitate the taxpayers, FBR has approved certain categories of the taxpayers to be excluded from selection i.e. those picked up for investigations by FBR Intelligence & Investigations Wing, all cases where income chargeable to tax under the head salary and /or pension exceeds 50% of taxable income, except cases having business income. Directors of companies do not qualify for this exclusion. All cases where entire income is covered under Final Tax Regime (FTR), all cases where declaration has been made under the Voluntary Declaration of Domestic Assets Act, 2018, all cases where declaration has been made under the Asset Declaration Ordinance, 2019 and Federal, Provincial and Local Government Departments, have also been excluded.
As per law, the Parameters for selection of cases for audit are confidential and hence shall not be disclosed. Balloting on the basis of above policy would be held shortly. The Audit Policy, 2019 pertaining to Tax Year 2018 has also been placed on the website of FBR which can be accessed at www.fbr.gov.pk