A major tax fraud has come to light involving fake transactions worth Rs84 billion, leading to tax evasion of Rs14 billion in just a few months. The manipulation and breach of taxpayer data security enabled this massive fraud, as revealed by official records and background interviews.
A complaint from a retired army officer prompted a thorough investigation by the Federal Tax Ombudsman (FTO). The investigation uncovered an organized tax fraud facilitated by IT personnel within the Federal Board of Revenue (FBR). A company in Zone-III, RTO-II, Karachi, filed sales tax returns from September 2023 to January 2024, reflecting bogus supplies worth Rs81.434 billion and GST of Rs14.658 billion.
Various buyers claimed substantial input tax against these fake supplies. The Sales Tax Registration Number (STRN) was blacklisted without an inquiry into the fraudsters misusing the complainant’s ID. The FBR and its IT subsidiary, Pakistan Revenue Authority Limited (PRAL), admitted to the non-availability of critical documentation, highlighting severe lapses in oversight.
Further investigations revealed complex forward and backward transactions benefiting numerous entities across different regions, including Karachi, Lahore, and Faisalabad. Fraudsters introduced Rs1.625 trillion of fake supplies by exploiting the sales tax account of a 79-year-old woman living abroad, who had been filing nil returns.
The checks and balances against fake transactions were disabled, leading to significant revenue loss. The fraud involved cybercriminals, with current and former employees of PRAL and FBR exploiting the computerized system.
The complaint against the Commissioner Zone-III, RTO-II Karachi, highlighted the improper blacklisting of the STRN without proper notices. The FTO has directed the FBR to ensure legal proceedings against the perpetrators and address the systemic failures that allowed this fraud to occur.
