Time for scrutinising tax files to be increased

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Doulot Akter Mala
The government is set to increase time for scrutinising and auditing tax files filed under universal self-assessment in a bid to help taxmen detect tax evasion by collecting sufficient information.
The National Board of Revenue (NBR) will increase auditing time for universal self-assessment tax returns by nine months to check furnished wealth statement properly.
Presently, taxmen have to complete auditing of tax files by 15 months after expiry of the tax assessment year.
Time might be extended to two years with effect from July 1, 2010.
Tax officials said the government has extended the time for auditing universal self assessment files after the revenue officials identified a huge tax evasion under the guise of the facility.
The government has introduced the universal self-assessment tax returns by cutting the discretionary power of taxmen. Taxmen have to accept those tax returns without any question.
Taxmen can only audit less than 10 per cent of the returns with prior approval of the NBR.
The government will also empower the deputy commissioners of taxes (DCT) to extend deadline for universal self-assessment tax return submission by six months instead of three months.
The universal self-assessment system has been introduced in 2007 with a promise to accept whatever amounts of taxes are paid by the taxpayers under it.
The NBR did not audit the tax files for the first two years. But in the current fiscal it has decided to audit certain categories of tax files.
For auditing, the NBR has listed 13 categories for individual taxpayers and nine for company taxpayers.
Tax officials have detected abuse of the universal self-assessment by some of the large taxpayers, who have submitted tax returns showing virtually no taxable income this year. But the same assessees paid substantial amounts of tax last year.
A number of big taxpayers have submitted returns showing a significant decline in income compared to that of last year, a tax official said.
"Although the government has introduced the measure to encourage voluntary filing of actual tax returns, audit is necessary as a control mechanism of the government to thwart concealment of actual income by abusing the facility," the official said.
For auditing, the NBR has selected files of those taxpayers who have shown illogical losses in business or shown income below taxable ceiling, abnormal decline in income compared to previous year without any logical reason, claimed refund excepting income from salary, interest/profit or agriculture, claimed excess tax exemption, unacceptable donation, shown non-institutional loan beyond Tk 0.5 million or institutional loan without any evidence, foreign remittance from individual or organisation without evidence, given no logical explanation of increased wealth, no evidence of income invested for purchase of car or flat/house, showing extremely low profit in business and low family expenditure.
For company taxpayers, the taxmen will audit files that have shown low income, loss in comparison to that of the last assessed income or claimed refund, claiming expenditure or refund which is not allowed under income tax ordinance, failure in deduction of tax at source, claiming non-institutional loan or tax-free income without evidence, showing less profit compared to previous year, abnormal increase of expenditure in specific sector and have shown continuous loss.