Under Reporting Taxes Caused Rs. 1 Billion Loss to National Exchequer

A lower assessment of sales tax and value-added tax (VAT) caused a loss of Rs. 1.28 billion to the national exchequer in the fiscal year 2020-21. According to the Auditor General of Pakistan’s (AGP) audit report for the financial year 2020–21, in 6,799 cases, 14 field offices of the Federal Board of Revenue (FBR) either did not realize sales tax and value-added tax or realized them at lower than the prescribed rates, losing the national exchequer well over a billion rupees in revenue. The document further reveals that these irregularities were pointed out from March to November 2021, and the department responded that cases of Rs. 497.68 million were under-recovery, Rs. 7.71 million under adjudication, Rs. 604.33 million subjudice, Rs. 46.80 million awaiting action, and Rs. 4.84 million were not responded to by the department. Moreover, the department of the FBR contested cases of Rs. 120.41 million on the grounds that the goods in question were cleared on payment of sales tax. The importer furnished retail prices and, accordingly, sales tax was levied on the subject consignments. The Audit was of the view that sales tax was assessed on the lower side as no retail price was available in the examination reports. The Departmental Accounts Committee (DAC), in its meeting held in December 2021, directed the collectorates to expedite the recovery process and pursue cases under adjudication/legal proceedings vice versa.