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ISLAMABAD: The Federal Board of Revenue (FBR)'s Directorate General of Internal Audit (Inland Revenue) has detected massive tax evasion cases of nearly Rs1, 300 billion during investigations conducted during the last six months of 2020-21, reflecting serious loopholes and irregularities in the working of income tax, sales tax, and federal excise departments of the FBR.

Official sources told Business Recorder here on Monday that the cases have been detected by Dr Ashfaq Ahmed Tunio, who is known in the department as one of the most competent and hardworking officers, with wide experience in customs, sales tax and income tax, both in the field as well as in policy making positions in the Board.

Recently, as DG Internal Audit, his performance has been phenomenal, where he detected tax evasion cases of nearly Rs1, 300 billion in just six months.

He has displayed similar extraordinary performance in the past. In most of the cases, the directorate has addressed the general and systemic issues including non-filing of income tax returns by persons showing sales tax turnover of Rs50 million and mega scams of non-filers withholdees (fake persons used for the purpose of evading income tax).

The mega scams of withholding taxes involved estimated revenue loss of Rs500 billion, according to the directorate's report.

In this regard, the Directorate General of Internal Audit (Inland Revenue) has submitted reports to the FBR highlighting weak monitoring and enforcement by the IR field formations of the FBR.

The defects and manipulation in the PRAL's system caused revenue loss of around Rs10 billion to the national kitty. Directorate has also unearthed big cases of Rs11 billion involving bogus sales tax registered persons and transactions during the said period. The estimated revenue loss of Rs10 billion within the steel sector has been worked out by the directorate.

Different kinds of serious irregularities have been committed by steel unit, which remained undetected by the FBR Inland Revenue field formations. The directorate has also unearthed massive revenue loss of Rs15 billion on account of violations of the SRO 1125 committed by different units under the name of export sectors.

Billions evaded on account of import of finished fabrics under the garb of SRO 1125.

The directorate has informed the Board that large-scale scams have been detected in withholding tax regime which are not properly checked by the field formations due to unknown reasons.

One such mega scam is by way of registration of fake withholdees and non-filing of income tax returns by them, the directorate's report said.

The withholding agents have made dubious purchases of goods and services on which withholding tax is involved, the sources added.

The scrutiny of withholdees data revealed that there are fake/bogus persons, whose names have merely being used to show huge purchases of goods and services, and thereby, reduce the withholding agents profits and tax liability, they added.

The combined revenue impact of other cases has been calculated at Rs5 billion, the sources said.

Copyright Business Recorder, 2020