Islamabad, July 3, 2025 — Pakistan’s tax enforcement regime just entered a whole new territory, and the business community is on edge. With the implementation of Sections 37A and 37B of the Sales Tax Act, 1990 — introduced via the Finance Act, 2025 — the government has signaled zero tolerance for tax fraud.
(more…)Tag: tax fraud
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Finance Act 2025 sets new arrest rules for sales tax fraud
Karachi, June 29, 2025 – The Finance Act, 2025 has introduced a comprehensive and structured procedure for the arrest and prosecution of individuals and entities involved in tax fraud under Section 37A of the Sales Tax Act, 1990.
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Supplying goods without tax invoice to be treated as tax fraud
Karachi, June 26, 2025 – In a bold and sweeping move aimed at clamping down on tax evasion, the federal government has proposed a major amendment to the Finance Bill 2025, redefining the scope of tax fraud to include any supply of goods made without the issuance of a valid tax invoice.
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RTO Karachi Launches FIR Against Mega Fake Sales Tax Invoice Scam Worth Rs 312 Billion
Karachi, September 12, 2023 – The Regional Tax Office (RTO) Karachi has taken a significant step in the fight against tax fraud by registering a First Information Report (FIR) to initiate formal legal proceedings against individuals involved in a massive fake sales tax invoice scam, which has led to a staggering loss of approximately Rs 312 billion to the national exchequer.
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IR intelligence unearths Rs4.27bn sales tax fraud
ISLAMABAD: The Directorate General of Intelligence and Investigation (Inland Revenue) has unearthed a sales tax fraud to the tune of Rs4.27 billion by M/s. Innovative Biscuits (Pvt).
A statement issued by the Federal Board of Revenue (FBR) on Monday said that the Directorate of Intelligence & Investigation (IR), Lahore on receipt of credible information related to sales tax fraud carried out action under Section 38 read with Section 40 of the Sales Tax Act, 1990 against M/s. Innovative Biscuits (Pvt.) Limited, Lahore.
Assessment order was issued wherein an amount of Rs. 4.27 billion as sales tax along with default surcharge and 100 percent penalty for tax fraud was imposed upon the registered person
Accordingly, accused Sheikh Munir Hussain, one of the Directors of M/s. Innovative Biscuits (Pvt.) Limited was arrested. Due to proper presentation of case by Directorate of Intelligence & Investigation (IR), Lahore, two bail applications filed by the accused were rejected by Special Judge, the FBR said.
Subsequently, the accused filed another application for bail before Lahore High Court. The Lahore High Court, Rawalpindi Bench, Rawalpindi granted post arrest bail to the petitioner on deposit of an amount of Rs 300 million and submission of post dated cheque of Rs. 100 million. The legal process is underway against the accused.
Directorate General of Intelligence & Investigation-IR has performed commendably well in the current Financial Year from July-2020 to April 2021.
The Directorate General has forwarded 653 Investigation Reports involving revenue of Rs. 197.714 billion to the field formations. The Directorate General conducted 40 raids where estimated revenue amounting to Rs. 761 million is involved. Directorate General filed 67 complaints under Anti-Money Laundering Act, 2010 against 75 accused persons involving Rs. 55.385 million. Directorate General also seized 6667 cartons of illegal cigarettes.
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What is tax fraud?
Sales Tax Act, 1990 has defined ‘tax fraud’ as doing of any act knowingly without lawful excuse.
The Sales Tax Act, 1990 [updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR)] explained ‘tax fraud’ as:
“Tax fraud” means knowingly, dishonestly or fraudulently and without any lawful excuse (burden of proof of which excuse shall be upon the accused) –
(i) doing of any act or causing to do any act; or
(ii) omitting to take any action or causing the omission to take any action, including the making of taxable supplies without getting registration under this Act; or
(iii) falsifying or causing falsification the sales tax invoices,
in contravention of duties or obligations imposed under this Act or rules or instructions issued thereunder with the intention of understating the tax liability or underpaying the tax liability for two consecutive tax periods or overstating the entitlement to tax credit or tax refund to cause loss of tax.