The FBR admits a staggering Rs3.6 trillion sales-tax gap, blaming the informal retail sector for evasion. The revenue authority has collected some through enforcement, but says closing the gap fully will require digital tracking and better oversight, especially in key sectors like textiles and petroleum.
The Federal Board of Revenue (FBR) has admitted that it is unable to fully close a Rs3.6 trillion sales-tax gap, primarily due to the fragmented and informal nature of Pakistan’s retail sector. The Express Tribune
In its recent assessment submitted to the Prime Minister’s Office, FBR Sales-Tax revealed that the shortfall from the retail sector alone is about Rs310 billion. Last fiscal year, while the target was to collect substantially more, the actual sales tax collections reached Rs3.9 trillion, leaving behind the gap of Rs3.6 trillion. The Express Tribune
Enforcement measures did yield Rs874 billion in revenue, but FBR has not disclosed a detailed breakdown of these gains. The Express Tribune
To address the issue, FBR suggests stronger enforcement at the manufacturing stage and enhanced digital mechanisms to trace supply chains. The government is pushing forward with digital invoicing to track business-to-business transactions. However, recent moves to count large cash bank deposits as digital transactions have raised concerns that they may weaken efforts to curb tax evasion. The Express Tribune
Sector-wise, the highest shortfall is in textiles with Rs814 billion, followed by petroleum and food products (each over Rs380 billion). Other affected sectors include chemicals & fertilizers, iron & steel, electronics, and beverages. The Express Tribune
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