A sub-committee of the Public Accounts Committee (PAC) has uncovered serious losses worth billions incurred by the Federal Board of Revenue (FBR) due to tax non-recovery, customs duty lapses and system errors.
The PAC Sub-Committee, chaired by Shahida Akhtar Ali, was informed on Tuesday that failure to collect withholding tax alone caused a loss of Rs. 24.15 billion to the national exchequer.
Audit officials revealed that 514 tax agents failed to deduct withholding tax, while violations were identified in 16 FBR field formations, in breach of Sections 161 and 205 of the Income Tax Ordinance, 2001.
Committee members expressed concern that no legal action had been taken against officials responsible for the losses. The PAC directed the FBR to immediately recover Rs. 171.9 million, finalise pending cases worth Rs. 6.63 billion, verify recovered amounts of Rs. 44.4 million, and produce missing records related to Rs. 104.85 million.
In another case, the committee reviewed losses of Rs. 25.5 million due to the non-collection of additional customs duty. Audit officials told the meeting that five customs collectorates cleared imports without charging additional duty during the period from July to December 2013.
FBR officials said Rs. 15.6 million had been recovered so far, while Rs. 10.9 million was still outstanding. PAC member Bilal Khan Mandokhail criticised the slow recovery process, noting that many defaulters were still traceable. FBR Chairman Rashid Langrial said recovery from one-time importers was difficult but assured continued efforts.
The committee was also informed of revenue losses amounting to Rs. 21.3 million due to incorrect data entries in the PRAL system, including wrong customs duty rates, misclassification of goods and unauthorized PCT headings. Audit officials pointed to improper application of concessional duty on Chinese imports and classification errors at Islamabad Customs Collectorate.
FBR officials argued that errors occurred due to the high volume of trade with China, involving over 5,500 items and bilateral trade of $17–18 billion annually. However, PAC members questioned why such mistakes were repeatedly occurring.
The Chairman FBR informed the committee that a customs officer had been directly arrested over such violations. PAC members, however, voiced dissatisfaction with routine explanations such as the retirement or death of responsible officials.
The committee directed the FBR to verify recoveries of Rs. 12.58 million and ensure recovery of the remaining Rs. 8.77 million, stressing strict accountability and corrective measures to prevent future revenue losses.