AGP uncovers Rs663bn tax black hole in FBR systems

ISLAMABAD: Pakistan’s tax machinery sprang a leak of nearly Rs662.7 billion last fiscal year (2023-24), according to the latest report of the Auditor-General of Pakistan (AGP).

While income tax lapses still form the single largest hole — Rs457 billion, slippages of Rs186.7 billion in sales tax and federal excise push the overall gap far past the half trillion rupee mark, exposing deep flaws in the Federal Board of Revenue’s (FBR) enforcement systems.

Audit report for the audit year 2024-25 (assessing financial year 2023-24) shows income tax still the main drain with Rs457 billion recorded.

Auditors blame eight recurring weaknesses for bleeding Rs457.1 billion. They mainly include:

* Rs167.9 billion in unrecovered super tax spanning more than 1600 cases;

* Rs149.6 billion lost after 18 field offices allowed taxpayers to inflate deductions with inadmissible ex-penses;

* Rs62.3 billion in assessed demands left uncollected;

* Rs45.4 billion in withholding tax never chased; and

* Rs22.9 billion in minimum tax that simply went unrealised.

In sales tax and FED (Federal Excise Duty), the audit pointed out Rs187 billion losses. The AGP highlights eight problem areas which include:

* The single biggest leak — Rs123.6 billion — came from input-tax credits claimed on invoices issued by suspended or black-listed suppliers, many of them non-existent.

* Non-apportionment of input tax between exempt and taxable supplies cos