NBR issues new guidelines for verifying income tax returns, certificates

The National Board of Revenue (NBR) has issued new guidelines for verifying tax return submission proof (PSR) and system-generated certificates containing TIN numbers. The decision aims to strengthen monitoring by tax zones to ensure proper verification of these documents by government and private service-providing authorities.

The guidelines, issued on August 6, require the formation of tax-at-source monitoring teams in each tax zone and assigning specific officers to verify PSRs and TIN certificates.

According to the guidelines, each tax zone must form monitoring teams with officers from Inspection Range-1 as convener, officers from Inspection Ranges 2, 3 and 4 as joint conveners, and Deputy Commissioners, Assistant Commissioners or Additional Assistant Commissioners as team leaders, with tax inspectors as members.

Where the same authority is responsible for both tax deduction at source and submission of PSRs or TIN certificates, the same monitoring team will be tasked with verification.

The NBR directive states that before providing any service, the service provider must verify the client's PSR from the latest tax year. Each PSR must be verified online through the NBR's e-Tax system's PSR verification method.

Similarly, the authenticity of system-generated TIN certificates must also be verified through the NBR's designated income tax website or by scanning barcodes.

The directive also requires service-providing authorities to be informed about the Finance Act and relevant laws, including Section 264 of the Income Tax Act, 2023, at the start of the fiscal year.

Penalties under Section 318 of the Income Tax Act, 2023 for non-cooperation with NBR, and fines under Section 264 for non-compliance with the directive, must also be communicated. Necessary publicity campaigns on the laws and guidelines are also required.

The NBR has directed that PSR and TIN certificate verification activities be brought under regular monitoring. For this, signed information on PSR and TIN certificate verification must be collected from implementing authorities on a prescribed monthly format. This information must be reviewed and monitoring activities conducted by the concerned tax zone.

A report must also be sent to the NBR's Tax Survey and Inspection Branch in the prescribed format within the first three working days of each month.

Under Section 147 of the Income Tax Act, 2023, PSRs and TIN certificates must be examined during verification of tax deduction or collection at source for companies, firms, associations of persons and trusts.

Under Section 142 of the Income Tax Act, 2023, if any person or entity fails to present the required PSR when receiving services, tax will be collected at 50 percent higher than the applicable tax-at-source rate.

The NBR has instructed concerned officials to conduct monitoring activities within their jurisdiction and not to send information to NBR outside the prescribed rules. Officials have been directed to work responsibly to ensure proper implementation of the guidelines. The new guidelines will formalise and make more technology-driven the verification process of income tax return submission proofs and TIN certificates.