AGP report: Non-recovery of ST from bricks kilns causes Rs144.02m loss to exchequer

LAHORE: The failure of Federal Board of Revenue (FBR) authorities to recover fixed sales tax from more than 500 brick kilns has caused a loss of over Rs 144 million to the national exchequer.

The inability of non realization of the ST from brick kilns has been reported in Auditor General of Pakistan’s report for the financial year 2023-24.

According to the report, during the audit of the fiscal year 2023-24 in five field offices of FBR, 548 taxpayers operating as bricks kilns were liable to pay fixed sales tax at the prescribed rates, but they didn’t deposit the same in the national kitty.

The report added that concerned tax authorities failed to recover the fixed sales tax or to get the bricks kilns registered in sales tax regime. Therefore, public exchequer sustained loss following non-monitoring of sales tax collection under the fixed tax regime. This inefficiency resulted in non-realization of fixed sales tax of Rs 144.02 million, the report pointed out.

When the AGP office reported these irregularities to the department from February to November 2024, it replied that cases of Rs 1.03 million were under recovery, Rs 4.96 million were under adjudication and legal proceedings for Rs 138.03 million had been initiated by the authorities.

The report further said that Departmental Accounts Committee (DAC), in its meetings held in July, November, October, December 2024 and January 2025, directed the department to expedite the recovery, adjudication/legal proceedings and submit a comprehensive reply. However, no further progress was reported till the finalization of this report.

“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 Rs 10,000 per month upon the Brick Kilns”, the report stated.

As per law every person engaged in making taxable supplies in Pakistan, in the course or furtherance of any taxable activity carried on by him/her, if not already registered, is required to be registered under this Act.

Copyright Business Recorder, 2025