How to Avoid Tax Notices from Federal Board of Revenue in Pakistan

The FBR has set up criteria for the selection of audit cases, and while certain notices might be received by taxpayers from time to time, there are certain key mistakes that can lead to these notices. To avoid such notices, it’s important to be aware of the following:

  1. Interlinked channels and taxes paid through them: The FBR is now interlinked with various institutions such as banks, NADRA, Excise and Taxation offices, and property evaluation departments. Any and all taxes paid through these channels are traced by the FBR. It’s important for taxpayers to keep up with the proper follow-up of their business transactions and ensure that all taxes paid are accurately recorded.
  2. CNIC number usage: When making purchases from a registered person, the CNIC number may be used to report sales made to unregistered persons. This is done to save the registered person from any legal complications. Taxpayers should monitor what taxes are deposited in their name and ensure that all taxes paid are accurately reported.
  3. Accurate income declaration and tax payments: One of the most common mistakes made by taxpayers is the partial disclosure of information or intentionally disclosing misinformation. For example, if a taxpayer purchases three properties in a tax year but only documents one property in their tax return, the FBR will most likely send a notice as they have records for all three properties. The same can be said for banking transactions, etc. It’s essential to ensure accurate income declaration and tax payments to avoid audit notices.
  4. Timely compliance: Late filing or not filing will also result in tax notices. Always ensure to file tax return and other compliance documents on time.

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In conclusion, receiving an audit notice from the FBR can be a stressful experience for taxpayers. However, by being aware of the criteria for selection of audit cases and common mistakes that can lead to such notices, taxpayers can avoid them. It’s essential to monitor CNIC number usage, ensure accurate income declaration and tax payments, and keep up with the proper follow-up of business transactions. By following these tips, taxpayers can reduce their chances of receiving audit notices from the FBR.

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