ایف بی آر کی پریس ریلیز

FBR’s Board-in-Council meets

A meeting of the Board in Council was held on 14.02.2013 at the Federal Board of Revenue (HQ) Islamabad, presided over by Chairman FBR. The meeting was convened to consider and approve the risk parameters for selection of cases for audit u/s 214C of the Income Tax Ordinance 2001, Section 72B of the Sales Tax Act 1990 and Section 42B of the Federal Excise Act 2005 pertaining to tax year 2011. After detailed discussion, the following parameters were approved which are being publicized for the information of all concerned:
PARAMETERS - INCOME TAX – CORPORATE

1)    Value of imports in Customs differ from declared Imports in Income Tax returns by 5%
2)    Sales decline >10% over last year
3)    Refund Claim >Rs.10 million
4)    Persistent decrease in net profit over last three years by more than 5%
5)    Cases claiming credit under sections 65B & 65C exceeding Rs.10(M)
6)    Cases indicating addition in plant and machinery exceeding Rs.200(M)
7)    Cases showing addition in machinery and plant/depreciable fixed assets in Tax Year 2009 without corresponding increase in turnover for Tax year 2011.
8)    Tax deducted u/s 233A (cash withdrawal) without business related cost of sales/P&L expenses
9)    Deduction of tax on services rendered above 50 (M)
10)    Adjustment of BF losses/unabsorbed depreciation above 500 (M)
11)    Exempt income –other sources, capital gain, business and property > 5 (M)
12)    Where addition or deletion to/from assets or transfer from Capital Work-in-Progress to assets is >100(M)
13)    Increase in turnover does not reflect proportionate increase in income (with a margin of  5 percent)
14)    Financial cost is more than 5% of turnover
PARAMETERS - INCOME TAX -  NON- CORPORATE

1)    Opening stock not Matching with Closing stock of Previous year
2)    Cost of Sales >80% of Total Sales (other than distributors/suppliers)
3)    Continuously declaring Loss for the last three years
4)    Continuously declaring decreased Income for the last three years
5)    Total sales are less than previous year by 10%
6)    Net tax paid is less than 10% in comparison of previous year

7)    Value of imports in customs differs from declared imports in income tax return by 5%
8)    Refund claim >5(M)
9)    Claim of exempt income – salary, business, property, capital gains, other sources and unclassified > 2 (M)
10)    Tax on services as minimum tax-over 1 (M)
11)    Non-filers of wealth-statement
12)    Increase in turnover does not reflect proportionate increase in income (with a margin of 5 percent)
13)    Financial cost is more than 5% of turnover
14)    Hotels/Restaurants with cost of sales over 70% of turn over / net sales

PARAMETERS - SALES TAX – CORPORATE

1)    Imports in Customs differ from declared Imports in S/Tax returns by 5%
2)    Decline in value of supplies  >10% over last year
3)    Consistent decrease in output tax / input tax ratio over last three years (total 3%)
4)    Decrease in proportion of taxable supplies to total supplies in last three years by 10% in each year
5)    Sales tax carry forward above 100(M)
6)    Where more than 30% purchases are from ‘unregistered persons’
7)    Where more than 30% sales are to 'unregistered persons‘
8)    Supply to blacklisted / suspended persons >50%.
9)     Purchase from blacklisted / suspended persons >50%.
10)     Non-filer, short-filer, nil-filer or null-filer for more than 6  months  in the year
11)    Manufactures showing value addition of <10%.
PARAMETERS - SALES TAX - NON-CORPORATE
1)    Total value of Supplies is less than previous year by 10%
2)    Net sales tax is less than 10% in comparison of previous year
3)    Registered persons (other than exporters) claiming refund consecutively for the last 12 months
4)    Import purchases differ from value of imports in customs data by 5%
5)    Refund claim >5(M)
6)    Where more than 50% of purchases are made from ‘unregistered persons’
7)    Where more than 50% sales are made to 'unregistered persons‘
8)    Supply to blacklisted / suspended persons >50%.
9)    Purchase from blacklisted / suspended persons >50%.
10)     Non-filer, short-filer, nil-filer or null-filer for more than 6 months in the year
11)    Manufactures showing value addition of <10%.

1.    
PARAMETERS – FEDERAL EXCISE DUTY -  CORPORATE
1)    Imports in Customs differs from declared Imports in ST/FE returns by 5%
2)    Supplies decline >10% over last year
3)    Consistent decrease in output tax / input tax ratio over last three years (total 5%)
4)    Decrease in proportion of taxable supplies to total supplies in last three years by 10% in each year
5)    Where more than 50% of purchases are made from ‘unregistered persons’
6)    Where more than 50% of sales are made to unregistered persons
7)    Supply to blacklisted / suspended persons >50%.
8)    Purchase from blacklisted / suspended persons >50%.
9)    Non-filer, short-filer, nil-filer or null-filer for more than 6 months in the year
10)    Manufactures showing value addition of <10%.

PARAMETERS -  FEDERAL EXCISE DUTY -  NON-CORPORATE

1)    Total Supplies is less than previous year by 10%
2)    Net FE duty is less than 10% in comparison of previous year
3)    Import purchases differ from value of imports in customs data by 5%
4)    Refund claim >5(M)
5)    Where more than 50% of purchases are made from ‘unregistered persons’
6)    Where more than 50% sales are made to unregistered persons
7)    Supply to blacklisted / suspended persons >50%.
8)    Purchase from blacklisted / suspended persons >50%.
9)    Non-filer, short-filer, nil-filer or null-filer for more than 6 months in the year
10)    Manufactures showing value addition of <10%.

2.        Federal Board of Revenue will select cases for audit on the basis of these parameters aimed at auditing high risk cases and promoting voluntary compliance culture. This will also minimize personal involvement in selection of cases which will result in reducing any possible harassment to the taxpayers.