AGP Issues Policy Guidelines to FBR on Blacklisted Companies

The Auditor General of Pakistan (AGP) has issued policy guidelines to the Federal Board of Revenue (FBR) to deal with the blacklisted companies including suspension of persons who failed to file sales tax returns for six consecutive months. According to a special study of the AGP on blacklisted companies, the AGP has issued a set of policy recommendations to the FBR to tackle the menace of blacklisted companies. Under the guidelines, the registration of persons involved in the issuance of fake invoices should be suspended. The registration of persons involved in the purchase/supply of taxable goods from/to black-listed registered persons should also be suspended. Moreover, the registration of persons who failed to file sales tax returns for six consecutive months may be suspended. The adjustment of input tax on taxable supplies, as claimed by the purchasers/sellers of black-listed registered persons, should be disallowed. The adjustment of refund on taxable supplies as claimed by the purchasers/sellers of black-listed registered persons should also be disallowed. The Internal Audit Wing should be strengthened to help management detect such irregularities at an early stage. An internal Audit may be conducted by FBR to detect other irregularities not covered by this study. Compliance with applicable provisions, under the Income Tax Ordinance and Sales Tax Act, should also be ensured. The main objectives of the audit were to examine whether the tax collecting authorities had exercised the vested provisions under the law under section 21 of the Sales Tax Act 1990 read with Rule 12 of Sales Tax Rules 2006.