Non-realisation of FED inflicts over Rs390m loss on the exchequer

LAHORE: The failure to collect Federal Excise Duty (FED) by the Federal Board of Revenue (FBR) Lahore office on goods at prescribed rates caused a loss of over Rs 390 million to the national kitty during the financial years 2022-23 and 2023-2024, says a report of the Auditor General of Pakistan (AGP).

According to the report compiled by the AGP office in 2025, during the audit of the financial years 2022-23 and 2023-24 three field officers of Large Taxpayer Officer (LTO) in four cases, either did not levy and collect federal excise duty on dutiable goods in cases of cement sector and air tickets or did not recover the liability of FED declared by the registered persons in annual audited accounts. This resulted in non/ short-realisation of federal excise duty amounting to Rs 390.45 million, the report said.

The Audit authorises reported these irregularities to the department from February to November 2024, and the department replied that legal proceedings in cases of Rs 152.88 million had been initiated. However, in cases of Rs 237.57 million, no response was furnished by the department, the report added.

The departmental accounts committee (DAC) in its meeting held in July, November and December 2024 and January 2025, showed its concern over non-responsive cases and directed the Chief Commissioner Inland Revenue, Large Taxpayers Office (LTO) Lahore, to personally intervene in the matter. In remaining cases, the DAC directed to expedite the legal proceedings in under process cases. Nevertheless, no further progress was reported till the finalization of this report, the AGP report noted with concern. The Audit also recommended expediting the legal proceedings for recovery the government revenue besides strengthening risk-based desk audits.

Interestingly, the issue was also reported earlier in the audit reports for the audit years 2019-20, 2021-22, 2022-23 and 2023-24 having a financial impact of Rs 5,849.06 million, but the recurrence of the same irregularity is a matter of serious concern, the AGPR observed.

Copyright Business Recorder, 2025