LAHORE: Administrative lapses and weak oversight by officers of the Federal Board of Revenue (FBR) have caused a loss of over Rs1.56 billion to the national exchequer, raising serious questions about internal controls and accountability within the tax authority.
An audit report issued by the Auditor General of Pakistan (AGP) for fiscal years 2022–23 and 2023–24 reveals that 16 FBR field formations wrongly granted tax exemptions and concessions in 1,628 cases, despite the imported goods being ineligible for such relief. The inadmissible exemptions covered duties and taxes on items including PCB boards, scientific equipment, edible oil and pharmaceutical products, resulting in a revenue loss of Rs1,556.52 million.
The audit pointed out that these irregularities were formally conveyed to the relevant FBR offices between February and November 2024. However, progress on recovery and corrective action has remained sluggish. According to management responses, recoveries of Rs253.84 million are “under process,” Rs250.13 million remain under scrutiny, Rs4.91 million are pending adjudication, and cases involving a substantial Rs1,041.25 million are stuck in courts. An additional Rs6.39 million was contested by the department, which claimed the exemptions were allowed under relevant schedules and Statutory Regulatory Orders (SROs).
The AGP rejected this justification, stating unequivocally that the imported goods were not listed in the applicable exemption schedules and, therefore, did not qualify for tax concessions. The audit described the exemptions as inadmissible and the loss as avoidable.
The Departmental Accounts Committee (DAC), in meetings held in August and December 2024 and January 2025, directed the FBR to speed up recoveries, aggressively pursue adjudication and court cases, submit detailed replies on cases under scrutiny, and get their stance verified by audit. Despite these clear directives, the audit noted that no tangible progress had been reported by the time the report was finalized.
In a pointed recommendation, the AGP called for the integration of artificial intelligence into the WeBOC system to block inadmissible exemption claims at the clearance stage and stressed the need to fix responsibility on officers found responsible for the lapses.
More alarmingly, the report highlighted that similar irregularities have repeatedly surfaced in audit reports from 2019–20 through 2023–24, with a cumulative financial impact of Rs15,000.28 million. The persistence of the same issue year after year, the AGP observed, reflects a systemic failure within the FBR and remains a matter of serious concern for public finance management.
