KARACHI: The Central Board of Revenue (CBR) while setting parameters for carrying out audit Under Section 177 of the Income Tax Ordinance 2001 has targeted those taxpayers who are already awaiting refunds.
A source in the CBR told The News that the board has circulated internal parameters to the tax officials to pick cases of corporate and non-corporate taxpayers for audit who have filed returns in the tax year 2003.
He said under the non-corporate cases, the CBR was going to select cases claiming refund of Rs100,000 or more for the tax year 2003 and the cases declaring income of Rs150,000 and above for the tax year 2003 where assessment in the past four years have been completed under Self Assessment Scheme (SAS).
For the corporate cases, the board would select cases where GP rate has declined by 20 per cent or more as compared to the higher GP rate declared in the past two assessment years.
Secondly, the CBR would select cases of exempt units, filing returns for the first time (tax year 2003) after the expiry of tax-holiday/exemption.
Besides, the cases where bad debts or provisions have been claimed at Rs10 million or more would also be selected for audit apart from those cases claiming refund of Rs20 million or more in LTU and Rs5 million or more in other regions for the tax year 2003.
Talking to The News, a tax expert felt that if one look at the parameters set for the non-corporate cases then he could easily see the ill intention of the board that a genuine taxpayer who had filed a claim of refund of Rs100,000 or more was to be penalised for leaving the money with the CBR.
Instead of giving him the refund, the CBR has come up with a law that could retain the money with itself instead of refunding it, he said.
Similarly, if one look at the corporate cases, then the parameters laid out for the cases regarding bad debts or provisions that have been claimed at Rs10 million, the CBR would great hit the banks, Modarabas, DFIs, etc who are governed by Prudential Regulations that allow creation of bad debts.
This move would tarnish the image of the CBR which it is trying to improve through reforms, he said adding that it seemed that the person who is drafting the rules is unaware of the repercussions with regards to the image building measures of the CBR.
Besides, those genuine people who have filed cases claiming refunds of Rs20 million or more in LTU and Rs5 million or more in other regions are also to come under total audit for being fair.
These persons instead of getting refunds will lose the money as their cases would be included in the audit, which will send negative among the taxpayers to evade taxes and use wrong methods to avoid from getting out of the audit.
This kind of approach by the CBR to squeeze the persons who are already under the tax net is not going to improve the image of the CBR and the present policy of Chairman CBR Abdullah Yousuf would fail if such parameters are not withdrawn, he said.