As per Lawkidunya, In Pakistan, agricultural income tax audits are conducted by the Federal Board of Revenue (FBR) as per the Income Tax Ordinance, 2001. Here’s an overview of the agricultural income tax audit process in Pakistan:

Types of Audits

1. Desk Audit: A desk audit is a preliminary audit conducted by the FBR to verify the accuracy of the tax return.
2. Field Audit: A field audit is a comprehensive audit conducted by the FBR to verify the accuracy of the tax return and to identify any potential tax evasion.

Audit Process

1. Selection of Taxpayers: The FBR selects taxpayers for audit based on various criteria, including:
– High-value transactions
– Large agricultural income
– Inconsistencies in tax returns
2. Audit Notice: The FBR issues an audit notice to the taxpayer, specifying the scope and duration of the audit.
3. Submission of Documents: The taxpayer is required to submit relevant documents, including:
– Tax returns
– Financial statements
– Agricultural income records
4. Audit Proceedings: The FBR conducts the audit, which may involve:
– Verification of agricultural income
– Examination of expenses and deductions
– Review of tax credits and exemptions
5. Audit Report: The FBR prepares an audit report, which may result in:
– No change to the tax liability
– Additional tax liability
– Refund of excess tax paid

Taxpayer’s Rights and Obligations

1. Right to Representation: Taxpayers have the right to be represented by a tax professional or attorney during the audit.
2. Obligation to Cooperate: Taxpayers are obligated to cooperate with the FBR during the audit, including providing requested documents and information.
3. Right to Appeal: Taxpayers have the right to appeal the audit findings to the FBR’s Appeals Wing or the Tax Tribunal.

Penalties For Non-Compliance

1. Penalty for Late Filing: A penalty of up to 2% of the tax liability per month may be imposed for late filing of tax returns.
2. Penalty for Understatement: A penalty of up to 100% of the tax liability may be imposed for understatement of agricultural income.
3. Penalty for Non-Cooperation: A penalty of up to PKR 50,000 may be imposed for non-cooperation during the audit.