Islamabad: The Federal Board of Revenue (FBR) recently announced its decision to audit and carefully scrutinize all cases regarding fake tax refund invoices — with this decision coming in response to allegations of discrepancies found in tax refunds, according to news sources. As per the tax authority, while all issues in this regard are expected to be resolved soon, the processing of each refund case has become a time-consuming endeavour.
Previously, the Federal Tax Ombudsman (FTO) and Auditor General of Pakistan (AGP) had expressed their reservations over the issuance of sizeable tax refund amounts. In various reports, the officials maintained that refunds were being granted without conducting an appropriate investigation of the claims under the FBR’s Expeditious Refund System (ERS) by the Centralized Sales Tax Refund Office (CSTRO).
The FBR has explained that there were two mechanisms being applied to deal with the refund claims. The first used an automated system to process refunds for the exporters; with an audit of these automated-processed refunds to be conducted at a later date.
The second system was devised for
the individual taxpayers, and the refunds issued under this mechanism were ‘carry
forward refunds’ which are issued once per year. The audit in these cases is
executed beforehand.
The FBR has assured that all
refunds are verified through lengthy inbuilt checks and computerised analytics
to identify fake invoices.
Despite these reassurances, the
AGP has strongly suggested for the tax authority to amend the Refund Rules by
inserting a post refund audit rule for each claim approved by the ERS.
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