FBR introduces electronic scrutiny system for sales tax returns

The Federal Board of Revenue (FBR) has devised a mechanism for electronic analysis of sales tax returns that would enable the automatic detection of legal errors, inconsistencies and other difficulties using its computerised system.

Under the new approach, the registered persons can avail online advise or advance notices through the IRIS site to give explanations, fix errors or take necessary corrective measures before any legal or punitive action is initiated.

The FBR has revised Sales Tax Rules, 2006 to provide for mechanism for the automated inspection, analysis and cross matching of sales tax returns and other accessible data through the computerised system.

The relevant Inland Revenue officer may also give a system-generated advance notice to the registered individual under the modified rules. The notice shall indicate a deadline for the submission of a response which shall be not less than seven days.

Where no response has been received within the period provided, a reminder shall be sent, giving the registered person a further term of at least seven days within which to respond.

The system will keep a record of any discrepancies or issues detected through automated checks, notices issued to registered persons and responses received. These documents will also be available to the proper officer of the Inland Revenue having power to assess tax.

The FBR said the information of the notices given to registered persons, their response and subsequent actions would be recorded in a system generated dashboard.

The automated scrutiny, analysis and cross matching of sales tax returns, and other available data and electronic communication with registered persons on issues identified by the system, shall be implemented through a Change Request Form (CRF) for smooth and effective operation of the computerised system.

The concerned officer of the Inland Revenue shall review the response supplied by the registered person and shall, as and when necessary, take action under the relevant provisions of the Sales Tax Act and the rules issued thereunder.