LAHORE: The office of the Auditor General of Pakistan (AGP) has detected an irregularity in payment of fixed sales tax by brick kilns operators resulting in a net loss of Rs144.02 million to the national exchequer.
According audit report finalized by the AGP office in 2025, it was observed during the audit of the financial year 2023-24 that in five field offices of the Federal Board of Revenue (FBR), 548 taxpayers operating as bricks kilns were liable to pay fixed sales tax at the prescribed rates under the rules and regulations, but the same amount was not deposited.
However, the tax authorities failed to recover the fixed sales tax or to get the bricks kilns registered in sales tax regime. Due to this, public exchequer sustained millions of loss following non-monitoring of sales tax collection by the officers concerned in the FBR, under fixed tax regime, the audit report observed.
It was further observed by the Audit that the inefficiency on the part of concerned field officers of the FBR resulted in non-realization of fixed sales tax of Rs144.02 million. The AGP office also made it clear that these irregularities were reported to the department from February to November 2024. The department, however, replied that cases worth of Rs1.03 million were under recovery, Rs4.96 million were under adjudication and legal proceedings for Rs138.03 million had been initiated.
The Departmental Accounts Committee (DAC), in its meetings held in July, November, October and December 2024, directed the department to submit a comprehensive reply and expedite the legal proceedings for recovery of the non-realised amount however no further progress was reported till the finalization of this report. The Audit also recommended to the FBR authorities for finalization of legal proceedings for the non-realised amount apart from implementation of risk-based desk audit and monitoring of financial statements.
According to the report, this issue was also reported earlier in the audit reports for the audit years 2021-22, 2022-23 and 2023-24 respectively having a financial impact of Rs988.26 million. However, the recurrence of the irregularity is a serious matter, the audit report noted with concern.
The report further observed that “According to Section 3(1B) & 14 of the Sales Tax Act, 1990 read with Tenth Schedule and Rule 6 of the Sales Tax Rules 2006, the tax on bricks, falling in (Pakistan Customs Tariff (PCT), shall be paid on fixed basis at the rate of Rs10,000 per month upon the brick kilns. Every person engaged in making taxable supplies in Pakistan, in the course or furtherance of any taxable activity carried on by him, if not already registered, is required to be registered under this Act.”
Copyright Business Recorder, 2025
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