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FBR Gives Inland Revenue Officials Power to Demand Tax Record

ISLAMABAD (November 15, 2010) -The Federal Board of Revenue (FBR) has empowered all officials of Inland Revenue, authorised by the concerned commissioner, to direct taxpayers for submitting tax records/documents to conduct sales tax audit under section 25 of the Sales Tax Act, 1990.

In this connection, the FBR has issued a clarification to the Large Taxpayer Unit (LTU), Islamabad. Sources told reporters that the LTU Islamabad had approached the FBR for obtaining necessary clarification on the provision of section 25 of the Sales Tax Act 1990 as amended by Finance Act 2010. Under section 25 of the Sales Tax Act, registered person is bound to submit record, documents or electronic data whenever required by the officials of the Inland Revenue. However, some questions had been raised by the LTU Islamabad regarding audit under section 25 of the Act.

Following are the queries of the LTU Islamabad, and response of the FBR:

Query: Whether only commission can invoke provision of section 25 and require production of record from the person or any other officer authorised by him can also require production of record?

FBR clarification: The Commissioner of Inland Revenue, as well as any officer authorised by the Commissioner, can require production of record for audit u/s 25 of the Sales Tax Act, 1990. Query: Whether the authorisation accorded by Commissioner to the officer of Inland Revenue to conduct the audit is an internal correspondence and whether the person whose audit is to be conducted can acquire a copy of the authorisation order/approval?

FBR clarification: The person whose audit is to be conducted may request a copy of the audit authorisation by the Commissioner to an officer of Inland Revenue, which should be provided. However, there is no requirement under the law to routinely provide such authorisation to the taxpayer prior to start of audit. Query: Whether similar authorisation u/s 68 of the Federal Excise Act 2005 is also required from Commissioner for conducting audit u/s 68 of the Federal Excise Act, 2005 or only authorisation u/s 25 of Sales Tax Act, 1990 will suffice.

FBR clarification: Separate authorisations by the Commissioner to the officer of Inland Revenue, under section 25 of the Sales Tax Act as well as section 46 of the Federal Excise Act, 2005, are required for conduct of respective audits.

The above clarification is based on the legal parameters set by the statute. However, the current audit policy issued by Taxpayers Audit Wing may be consulted for uniformity in conduct of audit, the FBR added.

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