Lahore, Pakistan: The Federal Board of Revenue’s (FBR) automatic selection of tax returns for audit under Section 214D of the Income Tax Ordinance has come under intense criticism from taxpayers and tax experts.
The section empowers the tax authorities to automatically select taxpayers for audit if they fail to file their returns on time. This has led to concerns about the fairness and transparency of the audit process.
Critics argue that the automatic selection process bypasses statutory filters and allows for arbitrary selection, leading to undue stress and financial burdens on taxpayers. Business Recorder
Taxpayers are worried that even minor discrepancies in their returns could trigger an audit, resulting in significant penalties and legal hassles. The broad and onerous audit requirements under Section 177 further exacerbate the situation.
Tax experts have called for a review of the automatic selection process, suggesting that it should be based on risk assessment and other objective criteria. They argue that the current system can lead to harassment and discourage voluntary tax compliance.
The tax community is urging the FBR to adopt a more balanced approach to tax audits, focusing on high-risk taxpayers and avoiding unnecessary scrutiny of compliant taxpayers. By doing so, the FBR can promote a more cooperative and efficient tax administration system.
