FIELD AUDIT GUIDELINES OF NBR

A file photo shows a man calculating income tax using a mobile phone at a tax fair in Dhaka. The National Board of Revenue is going to conduct ‘rigorous’ audit on the income tax returns of the highest individual and company taxpayers on a priority basis to dig out any possible concealment of income and tax evasion. — New Age photo

A file photo shows a man calculating income tax using a mobile phone at a tax fair in Dhaka. The National Board of Revenue is going to conduct ‘rigorous’ audit on the income tax returns of the highest individual and company taxpayers on a priority basis to dig out any possible concealment of income and tax evasion. — New Age photo

Highest taxpayers’ files to be audited on priority basis 

The National Board of Revenue is going to conduct ‘rigorous’ audit on the income tax returns of the highest individual and company taxpayers on a priority basis to dig out any possible concealment of income and tax evasion.
Field offices have already been instructed to select the tax files submitted in the current fiscal year on priority basis considering the revenue risk factors of the taxpayers.
The NBR has recently issued a Field Audit Guidelines for the fiscal year of 2014-15 for the field offices incorporating the issues, among other instructions.
In its guidelines, the revenue board asked its field offices to select tax files for audit based on specific flaws in the returns rather than assumption.
Multinational companies and large business houses can be selected for audit considering their imports, procurement, exports, sales, increase of assets and quantitative analysis of manufacturing accounts, it said.
Specialised and medium business houses may also be selected for field audit considering revenue potentials, it added.
Field offices will have to send the list of tax files describing the reasons—legal and factual—for selecting the files for audit by March 1 to the NBR.
Audit, Intelligence and Investigation wings of the NBR will give final approval for conducting audit on any tax files.
Under the field audit, taxmen conduct thorough investigation of the tax files selected for audits to find if taxpayers have evaded tax or not.
The NBR usually selects 2 per cent to 3 per cent of tax files from the files submitted under the universal self assessment method for auditing, considering risks of tax evasion.
According to an analysis conducted by the NBR, very few of the highest individual and company taxpayers identified based on their declared income, net assets and turnover or tax payment status came under field audit in last three years, officials said.
In this context, the NBR decided to give priority on auditing the tax files of the highest taxpayers as those tax files were most important in terms of revenue collection through detecting income concealment, they said.
Field offices were asked for preparing a worksheet for the taxpayers based on revenue risk factors provided in the guidelines, they added.
Risk factors include cumulative increase of income compared to that of previous year, declaration of loss in business, gift, personal loan more than Tk 5 lakh, tax-exempted income, income which were taxed at reduced rate and tax refund demanded in the tax files for the current fiscal year.
Field offices will also consider the tax files for auditing if it found any concealment of income of the taxpayers through audits conducted in last three years, any mismatch between income tax returns and company audit report and any unusual fall or rise in profit, procurement, import, export and other financial statements.
The revenue board, however, will not audit the income tax returns submitted under the universal self assessment if the taxpayer shows 20 per cent higher income than immediate previous year, provides documents and evidences in support of tax-exempted income and bank loans above Tk 5 lakh, and shows no gift, no refund and no income which is taxable at reduced rate.
The tax files will not also be audited if it was audited at least once in last three years and fulfilled conditions for getting exemption from audit under universal self assessment.
The NBR issued the guidelines to ensure effectiveness of field audit and reduce hassle of taxpayers.

Source: New Age

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