Auditor General asks FBR to recover Rs925 billion from taxpayers after audit reveals major irregularities

The Auditor General of Pakistan (AGP) has directed the Federal Board of Revenue (FBR) to recover over Rs925 billion from taxpayers after identifying financial and procedural irregularities within the Inland Revenue and customs departments during the 2024-25 audit period, Business Recorder reported. 

The audit, conducted throughout the fiscal year, revealed a recovery target of Rs925.8 billion, with Rs19.3 billion already recovered between January and December 2024. The findings marked a 25% increase in recovery compared to the previous fiscal year.

According to the audit report, the primary issues contributing to the shortfall included weaknesses in tax assessments, leading to leakage and insufficient tax collection from existing taxpayers. 

The audit revealed that Rs3,882.61 million in tax credits had been claimed after the due date for registration under incentive schemes, while Rs2,461.47 million was claimed beyond the stipulated five-year period. 

Additionally, a potential loss of Rs8,385.75 million was identified due to non-compliance with tax rules in the real estate sector, and Rs557.77 million in inadmissible tax credits were allowed to property buyers using fake NTN/CNICs. 

In the steel sector, Rs512.01 million in sales tax remains uncollected from blacklisted individuals, while Rs249.78 million was found to be inadmissible in input tax adjustments.

In the area of income tax, the audit showed that 22 FBR field offices failed to realize minimum tax worth Rs22,874.66 million across 1,652 cases. Meanwhile, 20 FBR field offices did not collect Rs167,887.87 million in super tax in 1,026 cases, and 18 offices missed Rs149,571.28 million in income tax due to inadmissible expense claims in 1,084 cases. 

The report also revealed that 19 FBR field offices failed to recover Rs45,386.45 million in withholding tax from 1,344 cases, and 16 offices missed Rs62,318.02 million in tax demands in 1,571 cases.

Additionally, the audit uncovered that 19 FBR field offices sanctioned inadmissible refunds totaling Rs6,795.41 million across 817 cases, while 6 field offices short-realized Rs2,253.86 million due to non-apportionment of expenses in 15 cases. 

The report also highlighted that 19 FBR field offices did not monitor Rs123,585.02 million in input tax credit on invoices from suspended or blacklisted taxpayers and fake invoices across 375 cases.

The AGP has directed FBR to take immediate action to address these issues, emphasizing the need for improved fiscal management, stronger enforcement of tax regulations, and greater transparency in the tax collection process.