In an effort to strengthen the anti-tax fraud and evasion procedures, the Federal Board of Revenue (FBR) has released a notification detailing important changes to the Sales Tax Act, 1990.
The decision to create a specialised section tasked with looking into tax fraud cases is among the major improvements. The new wing will include a Digital Forensic Unit and an Intelligence and Analytical Unit to improve the enforcement of tax rules.
People who don’t file tax returns could get summonses or notices under the modified laws. A steep fine of either Rs 25,000 or 100% of the tax amount, whichever is higher, would be imposed for submitting forged or fraudulent documentation. On top of that, filing false tax returns can land you in jail for up to five years.
Severe fines for tax evasion have also been established by FBR. Offenders risk a maximum five-year prison sentence for tax evasion of less than Rs. one billion. A fine equivalent to the amount evaded is imposed in addition to a 10-year prison sentence for amounts over Rs-1 billion.
Under the amended definition, purposeful under-declaration of taxes or underpayment of dues are now included, as well as the filing of fake documents and information concealment. The revised law will also closely examine claims of excess tax credits against duty paid.
All matters concerning tax fraud will be handled by the recently established Tax Fraud Investigation Wing. The ability to obtain electronic invoices from people, organisations, or businesses will be provided by this wing. An automated system makes it possible to verify these invoices in real time, guaranteeing increased accountability and transparency.
As a major step towards preventing tax fraud and improving the integrity of Pakistan’s tax system, these strict procedures and the creation of the special investigation wing are being implemented.
