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CREST to check bogus refunds: FBR

Federal Board of Revenue (FBR) logo. — File Photo

ISLAMABAD, Jan 2: Federal Board of Revenue on Wednesday launched the computerised risk-based evaluation of sales tax (CREST) software to check claims for bogus refunds and illegal input tax adjustments against fake and flying invoices from the sales tax department.

The software was developed in the wake of rampant payment of illegal refunds and input tax adjustment. Some estimates project loss as high as Rs20 billion a month on this account to the government.

FBR official spokesperson Israr Rauf said that in the month of July discrepancies were identified in the tax returns and the results were then sent to the field formation for catering with the identified taxpayers.

An official statement of the FBR said that the system was in test-stage and messages to 1,000 sales tax payers have already been sent by FBR alerting them to discrepancies detected in their cases.

FBR is capturing transactions by registered persons to identify where a registered person is denied benefit admissible under the Sales Tax Act.

Accordingly, FBR has developed the CREST software that checks information in monthly returns, import/export data and cross matches for every registered person.

Exceptions that emerge will be conveyed electronically to registered taxpayers, who in turn can explain their position to FBR by using CREST and attaching their supporting documents.

The CREST system has an in-built capacity to verify the veracity of reply received from the registered person. CREST system is designed for Sales Tax and is based on declarations and covers areas as purchases including Input tax adjustment of buyers and suppliers; Zero Rated Sales to registered person with non-active ATL or blacklisted or suspended Sales Tax Registration Numbers (STRNs); Section 8B-exemption-claims against qualifying criteria per notification; Exports claim in returns which do not match with Customs export data; Commercial Imports by non-manufactures who also do not show value addition on imports.

At the same time, CREST allows faster and timely sending of discrepancy-alerts to taxpayers. CREST also provides taxpayers an IT system that they can use in order to reply to the CREST discrepancy-alerts without taxpayer needing to visit the tax offices. CREST use by taxpayers is an optional-facility and taxpayers can ignore it and make an in-person visit to tax office to explain his position regarding the discrepancy-alert.