ISLAMABAD, March 25: The Auditor General of Pakistan (AGP) has detected a revenue loss of Rs967.72 million to the national exchequer due to incorrect exemptions granted to taxpayers in 67 cases, says a report.
The loss occurred due to absence of a review system and inadequate evaluation criteria and procedure for the income tax department officials to ascertain and verify the date of start of commercial or trial production, the responsibility of which rested solely with the CBR.
This audit covered a test check of only 600 case-files of various zones of the income tax department, half of which could not be examined due to time constraints. The special report prepared on grant of exemptions in tax holiday areas has been submitted to the president and subsequently placed on the National Assembly record.
According to the report in nine cases, exemption from tax was allowed without determining the date of setting up, which resulted in a net loss of Rs145.92 million. And in seven cases, the exemption was allowed beyond the admissible date, which caused loss of Rs98.75 million.
Further analysis showed that in 10 cases, the exemption was granted to non-filers of required documents, causing loss of Rs52.05 million; in six cases, exemption was allowed against the rules to assesses engaged in multifarious business activities, which caused loss of Rs48.56 million; in 10 cases, the exemption was granted by incorrectly determining period of exemption, resulting in loss of Rs27.57 million; in three cases, an exemption clause was unduly changed with another clause, which caused loss of Rs33.32 million; and in one case, the exemption was allowed to a hotel, which caused loss of Rs0.63 million.
Similarly, in 10 cases, the exemption was granted to units that had been constituted by splitting up, which was against the law and revenue loss occurred estimated at Rs169.53 million; in five cases, other income of exempt units was not taxed that caused an estimated loss of Rs151.43 million; in four cases, the exemption was allowed without determining the entitlement of the location, which caused loss of Rs206.97 million; in one case, the exemption was allowed to a leased out unit, which caused loss of Rs0.62 million; and in one case, the government sustained loss of Rs29.38 million due to filing a time barred appeal.
