The Federal Board of Revenue (FBR) has announced severe penalties for tax evasion and fraud, including a jail term and fine, in a bid to curb tax avoidance and ensure compliance. The penalties are stringent, with a jail term of up to five years for tax evasion of less than Rs1 billion and up to ten years for tax evasion of Rs1 billion and above. Additionally, a fine of Rs25,000 or 100% of the amount of tax evaded or sought to be evaded, whichever is higher, will be imposed. The fine may also extend to an amount equal to the amount of tax evaded or sought to be evaded.
To combat tax fraud, the FBR has established a dedicated Tax Fraud Investigation Wing-Inland Revenue, comprising various units, including Fraud Intelligence and Analysis, Fraud Investigation, Legal, Accountants, Digital Forensic and Scene of Crime, and Administrative units. This wing will detect, investigate, and prevent tax frauds, ensuring that those who engage in such activities are brought to justice.
The FBR has also incorporated a new definition of “tax fraud” in the updated Sales Tax Act, which includes intentionally understating or underpaying tax liability, overstating entitlement to tax credit or tax refund, submitting false returns or documents, and withholding correct information or documents to cause loss of tax. Furthermore, the FBR may require any person or class of persons to integrate their electronic invoicing system with the board’s computerized system for real-time reporting of sales, ensuring transparency and accuracy in tax reporting.
These measures demonstrate the FBR’s commitment to combating tax evasion and fraud, ensuring a fair and transparent tax system, and promoting a culture of compliance among taxpayers. By imposing severe penalties and establishing a dedicated investigation wing, the FBR aims to deter tax fraud and ensure that revenue is collected efficiently and effectively.
