Automated scrutiny of tax returns to

end universal self-assessment

scheme
ISLAMABAD: The introduction of automated scrutiny of all income tax returns
may end the Universal Self Assessment Scheme (USAS) in the country.
The Finance Bill, 2020 introduced a major policy change under which the FBR to
conduct scrutiny of all income tax returns.

In contrast the existing USAS all the returns filed by taxpayers are accepted by the tax
authority.

The USAS was introduced through promulgation of income tax ordinance in year 2001.

Tax experts said that currently where a taxpayer has furnished a return of income, the
Commissioner of Inland Revenue shall be treated to have made an assessment of
taxable income and tax due thereon equal to amounts specified in the return.

Further, such return shall be taken for all purposes to be an assessment order issued by
the Commissioner.

“Under the USAS all the taxpayers automatically qualify for self-assessment. The
returns filed by them are considered as final unless their cases are selected for audit
through pre-announced audit parameters,” said a senior officer at Federal Board of
Revenue (FBR).

Deloitte Yousuf Adil Chartered Accountants commented that under the proposed
mechanism, the return filed shall 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.
In this regard, a notice shall be issued to the taxpayer before the adjustments are
effected in the return, which is required to be responded within 30 days of the date of
notice.

Further, where no such adjustments are made within the specified period of six months,
the return filed shall be deemed to have been automatically adjusted on the day the
return is filed and automatic intimation through IRIS shall be forwarded to the taxpayer.

The existing provisions as to deemed assessment order will now apply to adjusted
return rather than the original return filed by the taxpayer.