KARACHI, March 26: The directorate-general of Inspection and Internal Audit, Federal Board of Revenue, has detected over Rs1 billion pocketed illegally by textile exporters through fraudulent sales tax refunds.
The recoverable amount, which is likely to increase to Rs1.5 billion, has been detected within three months through completion of internal audit of cases selected under a risk-based mechanism.
This was stated by Abdul Wadood Khan, director-general Internal Audit and Inspection, Islamabad, while talking to Dawn.
He said that the exercise was carried out as a special assignment given by the FBR chairman and the cases put to audit belonged to 2001-03 when the vested interest in textile export trade extensively used ‘fake invoices’ to claim and obtain refund through fraudulent means.
He said the audit reports had been sent to respective collectorates for making contravention cases against exporters for recovery of the said amount.
The cases of obtaining fraudulent refund pertained to the pre-zero rating of sales tax allowed to textile exports.
Mr Wadood said that the department had also submitted proposals to check evasion of custom duty and misuse of the DTRE facility.
It has proposed that the facility of duty-free import under DTRE should be accorded on at least one year performance of the applicant instead of the current six months period.
The audit indemnity period of exports under DTRE has been proposed to be reduced from the current 18 months to 12 months.
Under directives from the FBR chairman, the department of internal audit is busy in formulating an audit plan and an audit manual for all tax departments of the FBR.
Provisions of the audit laws have been strengthened and made update to effectively check leakage of revenue and evasion of taxes.
Mr Wadood further stated that Universal Self Assessment Scheme has created some wrong impression among certain businessmen who misused the facility as a tool to evade tax. The department, therefore, was constrained to design a strong audit mechanism to check malpractices under USAS.
The department has also been assigned the task to investigate complaints of corruption and mishandling against certain customs, sales tax and income tax officers.
There are presently complaints being investigated against ten to 12 officers.
