Closure of Automatic Audit under section 214(D) on increasing tax liability by 25%

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The FBR has allowed 'one time option' to the taxpayers in order to get immunity for those selected through automatic tax audit selection procedures laid down under the Section 214(D) of the Income Tax Ordinance 2001.

The said option has been given through the mini budget 2018-19 presented by the Finance Minister Mr Asad Umar.

The concept of the automatic audit selection recently came into effect through Section 214(D) of the Income Tax Ordinance 2001. However, the said provision was removed/omitted through the finance act 2018 due to the hardship faced by the new taxpayers. 

In order to give relief to the taxpayers who have been selected automatically for the audit under section 214(d) the Federal government has granted a 'one time option' only if the taxpayer pay tax at 25% higher rate than that declared as tax liability then that declared in the income tax return.

Doing so the audit proceedings initiated under the provisions of 214 D of the Income Tax Ordinance 2001 shall stand closed.

In addition to the above where a taxpayer who filed a 'Nil' return and was selected in automatic audit selection under the subjection 214(D) of the Income Tax Ordinance 2001 is required to pay tax equal to two percent (2%) of the total turnover in order to avail this one time option and get immunity from the audit selection under Section 214(D) of income tax Ordinance 2001.

Furthermore, any such taxpayer filing a Nil return without having any turnover is required to voluntarily pay the penalty for late filing of the return under section 182 of the Income Tax Ordinance 2001 in order to avail this one time option.

It should be noted that the option of one time payment as discussed above is not applicable to the person driving income through salary, profit on debt, house property or where the income is subject to final taxation or separate tax regime.

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