Monday, October 18, 2021

Automated assessment of tax returns deferred till June

KARACHI: The Federal Board of Revenue (FBR) has deferred automated assessment of tax returns till June this year as its online system is not ready to scrutinise taxable income and payable taxes, sources said on Wednesday.

The FBR accepted returns filed for the tax year 2020 without automated examination as its online system is yet to be updated.

Since the FBR did not introduce required changes in the online system all the returns were accepted without examination, according to the sources.

Last year the government brought to an end two-decade old self-assessment scheme through a new section (120(2A)) inserted into the Income Tax Ordinance 2001 under which a return filed by a taxpayer is to be processed through the automated system to arrive at correct amounts of taxable income and tax payable.

Prior to the amendment when a taxpayer furnished a return of income, the commissioner of Inland Revenue assessed the taxable income.

Under the law, the returns should be subject to an automatic review and adjustment within six months of filing of return for rectification of any numerical errors or incorrect claims, losses, deductible allowances or tax credit, or wrongful carry forward of losses that are apparent from the return of income, according to chartered accountants firm Deloitte Yousuf Adil.

A senior tax official said the law would be applicable for returns filed for tax year 2021.

“To make the income tax returns lawful an amendment is likely be introduced through an ordinance,” the official said, requesting anonymity.

Under the new system, the adjustments will be made after providing the opportunity of being heard through a system generated notice and after taking into account the reply received from the taxpayer. However, in case no reply is furnished, adjustments can be made within 30 days of the issuance of the notice.

A taxpayer aggrieved with an order passed under sub-section (2A) of section 120 of the ordinance will have right to appeal before the Commissioner (Appeals) under section 127 of the Income Tax Ordinance, 2001.

“Furthermore, in case no adjustments under sub-section (2A) of section 120 of the Ordinance are made within six months of filing of the return of income, return of income shall be deemed to have been assessed upon completion of the six months’ period, and intimation to this effect shall be given to the taxpayer automatically through Iris,” the FBR said.

Source: The News

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