12,553 cases selected for audit by tax authority

Karachi’s Saddar Bazaar is Pakistan’s highest tax paying market, at more than Rs77bn from 72,339 tax filers for the fiscal year ending in June 2018

The Federal Board of Revenue (FBR) of Pakistan has picked 12,553 cases of income tax, sales tax and federal excise duty (FED) for audit through electronic balloting.

Last year, 14,154 cases were selected for audit, while in 2018 the number was 44,868.

Of the total cases selected for audit, 10,441 fall under the category of income tax, 2,065 in sales tax, and 47 in FED.

Adviser to Prime Minister on Finance Dr Hafeez Shaikh pressed the button for electronic balloting in the presence of FBR chairman Javed Ghani and businessmen.

The national tax numbers/ CNIC (computerised national identity card)’s of those cases selected for audit have been displayed on the FBR website.

Shaikh said that the selection of audit cases would be computerised.

He also explained that a minimum number of cases are being selected for audit by focusing on only high-risk income tax, sales tax, and federal excise duty cases, so that the audit process can be completed appropriately and within a reasonable amount of time.

“This will also help in reducing the complaints of taxpayers about harassment and corruption,” he said, adding that the exclusions in audit policy will minimise the undue hardships faced by taxpayers.

Shaikh also hoped that the FBR will continue to improve its standards by providing services to both government departments and taxpayers.

He assured the business community of his full support and expressed the hope that the future is more promising for the country’s business sector.

In order to further build up taxpayer confidence, two committees have been constituted to address complaints against the FBR: a Business Committee to include board representatives and business individuals, and a Technical Committee for complaints about refund matters that would also include representatives from private sector.

FBR chairman Ghani said that the authority is working on the basis of the principles of transparency, simplicity and predictability.

He said that certain categories of taxpayers are excluded from selection – those picked up for investigations by the FBR Intelligence & Investigations Wing, where income chargeable to tax under the heading of salary and/ or pension exceeds 50% of taxable income, except in cases having business income.

Ghani said that directors of companies do not qualify for this exclusion.

All cases where the entire income is covered under Final Tax Regime, declaration under the Voluntary Declaration of Domestic Assets Act 2018, declaration under the Asset Declaration Ordinance 2019, and federal, provincial and local government departments, have also been excluded.

The criteria for selection of cases (for all taxes) for Tax Year 2018 is risk-based and parametric.

Cases have been selected using scientific approach for which software – Risk Based Audit Management System” (RAMS) – has been designed and put in place.

This software empowers the FBR to focus on non-compliant taxpayers and thus facilitate compliant taxpayers to build confidence in the audit system.

Meanwhile, the centre of economic hub Karachi’s Saddar market has emerged as the highest tax-paying market in the country, as per the data released by the FBR.

According to the Tax Directory Analysis for the Year ended June 30, 2018, from Saddar market – one of the country’s largest markets - Rs77,177,558,945 was collected in taxes from 72,339 tax filers, for the fiscal year ended in June, 2018.

Among the leading taxpaying markets in Karachi, from Jodia Bazaar alone situated in Saddar,

Rs3,059,924,445 was collected in taxes from 2,384 filers, whereas from Market Estate Avenue Rs6,191,036,104 was collected from just 774 filers, and from The Forum Rs3,314,055,039 was collected in taxes from 202 filers.

Second on the list was Islamabad’s Blue Area, where Rs39,935,580,162 was collected from 5,854 tax filers, for the fiscal year ended in June, 2018.

From Lahore’s Multan Road, Rs10,912,783,552 was collected in taxes from 17,800 tax filers, whereas, Rs4,175,140,322 was collected in taxes from Lahore’s Raiwind Bazaar.

From Peshawar’s Karkhano Market, Rs5,274,998,666 was collected from 10,417 tax filers.

The FBR said that the data has been compiled on the basis of registered addresses of filers.

Retail outlets have been reported as per registered address of head office.