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FBR recovers over Rs1b evaded in sales taxes


LAHORE: The Directorate of Intelligence & Investigation (Inland Revenue) of the Federal Board of Revenue, Lahore, has recovered sales tax evasion worth over Rs1 billion by a reputable company.

According to the FBR, the company issued illegal credit notes of significant amounts in Annexure-C of the sales tax returns without corresponding debit notes from the buyers. As a result, the company suppressed output tax to reduce its sales tax liability for the tax periods in which illegal credit notes were issued, thereby depriving the national exchequer of due tax revenue.

The Directorate’s team gathered information, without disrupting the company’s business activity. They initiated proceedings under section 38 of the Sales Tax Act, 1990, and obtained the record and documents from the business premises. Subsequently, the company management agreed to deposit the amount of sales tax involved in the credit note issued/claimed in the return of March 2023, along with default surcharge.

As a result of the timely intervention by the Directorate, sales tax amounting to Rs 1358 million and a default surcharge of Rs 26 million were recovered on 20th June 2023.

It is important for the Federal Board of Revenue to remain dedicated to eliminating tax evasion and tax fraud, so that a level playing field for tax-compliant businesses that contribute to the national exchequer, is ensured.

To prevent such fraudulent credit notes, the sales tax return has been amended to disallow suppliers of goods from issuing/claiming credit notes in the returns without first issuing debit notes by the corresponding buyers.

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