FBR Establishes Tax Fraud Investigation Wing-Inland Revenue to Combat Tax Fraud

The Federal Board of Revenue (FBR) has taken a significant step in the fight against tax fraud by amending the Sales Tax Act 1990 to establish the Tax Fraud Investigation Wing-Inland Revenue. This new wing aims to detect, investigate, and prevent tax frauds in order to ensure compliance with tax laws and regulations.

The updated version of the Sales Tax Act 1990 and the Federal Excise Duty (FED) 2005, effective until June 30, 2024, has been approved by parliament. Under this updated version, the FBR will impose a 25% General Sales Tax (GST) on the import of mobile or satellite phones with an import value exceeding $500 per unit. For phones valued at $500 or less, an 18% sales tax will be charged. Additionally, an 18% sales tax will apply to phones imported in CKD/SKD condition and to the supply of locally manufactured mobile phones in CBU condition.

The revised GST Act includes a new definition of “tax fraud,” which encompasses intentionally understating or underpaying tax liability, overstating entitlement to tax credit or refund, submitting false returns or documents, or withholding correct information to cause a tax loss. The Tax Fraud Investigation Wing-Inland Revenue will consist of various units to effectively investigate and combat tax fraud.

Furthermore, the updated Sales Tax Act empowers the FBR to require integration of electronic invoicing systems with the board’s computerized system for real-time reporting of sales. Penalties for submitting false documents or records include fines and potential jail time, with harsher penalties for larger tax evasion amounts.

Overall, the establishment of the Tax Fraud Investigation Wing-Inland Revenue and the amendments to the Sales Tax Act demonstrate the FBR’s commitment to cracking down on tax fraud and ensuring compliance with tax laws. This move is expected to strengthen tax enforcement efforts and deter individuals from engaging in fraudulent activities.