FBR announces jail term, fine for tax evasion, fraud

ISLAMABAD: The Federal Board of Revenue (FBR) has issued amendments to the Sales Tax Act 1990 to establish the Tax Fraud Investigation Wing-Inland Revenue.

The purpose of this wing is to detect, investigate and prevent tax frauds, The News reported.

The FBR issued an updated version of the Sales Tax Act 1990 and the Federal Excise Duty (FED) 2005 up to June 30, 2024 which was approved by parliament.

Based on the updated version, the FBR would charge 25% General Sales Tax (GST) on the import of mobile phones or satellite phones with an import value exceeding $500 per set, or equivalent value in rupees in case of supply by the manufacturer.

The 25% sales tax would be applicable on mobile phones in Completely Built Unit (CBU) condition at the time of import or registration (IMEI number by CMOs).

The FBR would charge 18% sales tax on phones where value is not exceeding $500 (18% ad valorem).

The rate of sales tax would be 18% on import in CKD/SKD condition and supply of locally manufactured mobile phones in CBU condition for both the values not exceeding $500 or exceeding $500.

The revised and updated version of GST Act incorporated the new definition of "tax fraud".

It means intentionally understating or underpaying the tax liability or overstating the entitlement to tax credit or tax refund in contravention of duties or obligations imposed under this Act by way of submission of false return, statements or false documents or withholding of correct information or documents to cause loss of tax.

The FBR's Tax Fraud Investigation Wing-Inland Revenue would comprise Fraud Intelligence and Analysis Unit, Fraud Investigation Unit, Legal Unit, Accountants Unit, Digital Forensic and Scene of Crime Unit, Administrative Unit, among others.

The updated Sales Tax Act revealed that the FBR could require any person or class of persons to integrate their electronic invoicing system with the board’s computerised system for real time reporting of sales.

Any person who submits a false or forged document to any officer of Inland Revenue; or destroys, alters, mutilates or falsifies the records including a sales tax invoice; or knowingly or fraudulently makes false statement, such person would pay a penalty of Rs25,000 or 100% of the amount of tax evaded or sought to be evaded, whichever is higher.

They would also be liable to up to five years jail if the tax evaded or sought to be evaded is less than Rs1 billion. The sentence would extend to up to 10 years if the tax evaded or sought to be evaded is Rs1 billion and above, and a fine which may extend to an amount equal to the amount of tax evaded or sought to be evaded, or with both.

The person who commits, causes to commit, or attempts to commit the tax fraud would pay a penalty of Rs25,000 or 100% of the amount of tax evaded or sought to be evaded, whichever is higher. They would also be liable to up to jail term and fine equivalent to those of tax evaders.