Federal Board of Revenue (FBR) Chairman Salman Siddique has directed the field formations to register FIRs against the persons involved in claiming illegal input tax adjustment to evade tax. In this connection, the FBR on Friday issued instructions to the Chief Commissioners of Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs).
Sources told Business Recorder that the seriousness of the issue is evident from the fact that the FBR has to submit a report to the Ministry of Finance on the action against the claimants of the illegal input tax adjustment. An effective strategy is needed to be implemented for checking the on-going tax frauds in the name of sales tax adjustments.
According to FBR instructions, the FBR has devised a strategy to plug in the illegal sales tax adjustments. FBR Chairman has advised the Chief Commissioners of the LTUs and the RTOs to strictly monitor the sales tax regime so as to plug illegal inputs through use of technology and registration of the FIRs against persons making such adjustments and frauds.
The FBR will also form a committee to submit recommendations to the Minister of Finance Hafeez Sheikh on the illegal input adjustments claimed by the unscrupulous elements. It is worth mentioning that during the Board-in-Council meeting, it had been brought to the notice of the tax authorities that around Rs 84 billion inadmissible tax adjustments were claimed by unscrupulous elements.
The FBR decided to investigate and verify the amount of Rs 84 billion inadmissible tax adjustments claimed by the registered persons. The figure of Rs 84 billion is authentic where illegal adjustments have been claimed despite expiry of six months period as admissible under the law.
The taxpayers are eligible to claim tax adjustments within a period of six months under section 7 of the Sales Tax Act. The cases of Rs 84 billion are related to the period where taxpayers have claimed input tax adjustment beyond six months period. Thus, the Board-in-Council meeting decided to thoroughly investigate these cases for which the FBR Inland Revenue Wing and the FBR Taxpayer Audit Wing would jointly work to verify the amount in cities where higher amount of inadmissible tax adjustments have been detected.
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