Karachi, January 10, 2025 – The Federal Board of Revenue (FBR) has announced stringent measures against sales tax fraud, including a jail term of up to 10 years for offenders. These penalties are prescribed under the Sales Tax Act, 1990, and aim to curb fraudulent practices that undermine the country’s revenue collection efforts.
According to the FBR, any individual found committing, causing, or attempting to commit sales tax fraud, or assisting in such activities, will face severe consequences. The FBR outlined the penalties and jail terms applicable for these violations:
1. Penalties for Direct Offenders: The person directly involved in committing or attempting sales tax fraud will be subject to a penalty of either Rs. 25,000 or 100% of the tax evaded, whichever is higher. Beyond this financial penalty, the FBR stated that, upon conviction by a Special Judge, the offender could face imprisonment of up to five years if the tax evaded is less than one billion rupees. If the tax evasion amounts to one billion rupees or more, the jail term may extend to ten years, accompanied by a fine equivalent to the amount of tax evaded.
2. Penalties for Abettors and Facilitators: The FBR emphasized that individuals who abet or connive in committing tax fraud are equally culpable. Such individuals, upon conviction, may face imprisonment of up to five years for evaded amounts under one billion rupees. For tax evasion of one billion rupees or more, the jail term can extend to ten years. These offenders will also be liable for fines up to the amount of the evaded tax.
The FBR’s stringent measures reflect its commitment to combating tax fraud and enhancing compliance with tax laws. Sales tax fraud has long been a challenge for Pakistan’s tax administration, leading to significant revenue losses. By enforcing these penalties, the FBR aims to deter individuals and businesses from engaging in fraudulent practices.
The FBR’s announcement serves as a clear warning to potential offenders and reinforces the government’s resolve to ensure fair tax practices. The measures also highlight the FBR’s efforts to strengthen Pakistan’s tax regime and promote transparency within the system. Stakeholders are urged to comply with tax regulations to avoid severe penalties and legal repercussions.