Government of Pakistan
Revenue Division
Central Board of Revenue
No. 10(1)-M(TPE&F)/2002 Islamabad, the 01st July, 2002
Subject: NEW INCOME TAX LAW AND RECORD KEEPING REQUIREMENTS FROM 01-7-2002 FOR RETURNS TO BE FILED IN SEPTEMBER 2003
Dear Taxpayer,
Income Tax Ordinance, 2001 shall come into force on July 01, 2002. The new income tax law is in plain simple language and is easy to understand. You can now prepare your income tax return and compute your tax liability without any difficulty.
2. The new income tax law will bring a complete change in the philosophy of income tax proceedings and it will make life easier. The salient features are:
Henceforth, the assessing officer will not determine your income and compute your tax liability. Now you shall yourself declare your income and determine your tax liability.
Your income tax return shall be accepted without any conditions. There will be no compulsory enhancement of tax liability over previous year to qualify for acceptance.
Income tax return filed it-self will be an assessment order and your eligibility for refund will flow from your tax return.
A certain percentage of returns filed shall be selected for tax audit on the basis of risk assessment to verify the accuracy and correctness of your income tax return.
Tax audit shall not necessarily mean an amendment of the assessment originally made by you in your return of income.
Your original assessment can only be amended on the basis of information acquired during tax audit or any other source.
If selected for audit, there will be no pre-designated auditors to carry out audit. The officials making selection for audit will be different from those who do actual audit. In other words you will have no designated Income Tax Officer holding jurisdiction on you.
3. Thus universal self-assessment in its true sense will be available to all taxpayers
irrespective of quantum, status, location or size. This is the first such experience in this part of the world.
4. The new law and the universal self-assessment system will take away the discretionary powers of the tax collectors and place great responsibility and obligation on you as a taxpayer and an honorable citizen.
5. The new Income Tax Ordinance, 2001 and its salient features, briefly explained above, cannot work without adequate records to support the items reported by you on the income tax return and allied statements.
6. The CBR is fully aware of your (small taxpayers) problems and difficulties in maintaining adequate records. Therefore only bare MINIMUM books of account; documents and records that you generally maintain to run your business have been prescribed. Details may be seen in the enclosed brochure. The benefits you will get from maintenance of records are much more than the effort to maintain these easy records.
7. Effective 1st July 2002 our teams in collaboration with the representatives of your trade association shall visit various groups of taxpayers and provide assistance and guidance that you may
require for maintenance of adequate records. It is categorically stated that the purpose of the visit to individual taxpayers will be only to provide you assistance and guidance. No punitive action shall be taken in the initial phase.
8. The Government has discharged its obligation of providing a simple law based on genuine self-assessment concepts. Now it is your turn to respond positively by faithful recording of your business transactions, declaring your income and discharging your tax liabilities.
9. Let us join hands to achieve our common goals, which are: -
Simple tax laws
Taxpayer friendly environment
Honest and efficient tax administration
Broadening of taxpayer base
Reduction in appeals / disputes
Increased voluntary compliance
Greater taxpayer satisfaction
10. All our field offices and we at CBR shall be pleased to personally discuss and elaborate any apprehensions you may have in this regard.
(Habib Fakhruddin)
Member
(Taxpayer Education and Facilitation)
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