Finance minister announces crackdown on GST evaders

ISLAMABAD: Finance Minister Muhammad Aurungzeb announced on Thursday that a huge crackdown will be launched on the general sales tax (GST) evaders and they will be sent to jail.

Addressing a press conference along with Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial, he said that a number of companies are involved in billions of tax fraud, stating the current tax gap stands at Rs3400 billion.

With respect to tax collection, the minister said that the current tax shortfall remains up to Rs18 billion in the cement, Rs18 billion in textile, Rs11 billion in battery sectors and Rs11 billion in the beverages sector. This can boost the country’s economy if they are paid.

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Aurungzeb said that of 0.3 million manufacturing companies only 14 per cent are registered with the SECP. He said that a tax evasion of Rs29 billion is commited in iron and steel sectors alone in the name of additional input tax claim, which is a big fraud and in vague in the country.

The minister warned that individuals evading tax up to Rs1 billion will face five years jail term and those evading more than this will face 10 years jail term.

During the press conference, the FBR chairman said that an immeasurable evasion was being carried out by major companies in sales tax in the country.

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He warned that the tax return files submitted by most companies are fake, adding that “After correcting all information and collecting data about the tax evaders, we will make public names of all such companies and their owners will be sent to jail.”

Langrial highlighted that the chief financial officers (CFOs) of these companies are not direct beneficiary of such misconduct. However, they sign on the incorrect sales tax returns which is a crime. He asked CFOs not to sign such documents even if their “seths” ask them to do so.

The FBR chairman said that all legal process will be completed within a week to send jailing sales tax return evaders. He said that all CFOs should seek advice from their counsel and families prior to signing such documents.

The FBR chief said a major crackdown will be launched against the sales tax evaders in the next 15 to 20 days and they will be arrested. He asked the CFOs of all major companies to avoid submitting incorrect sales tax input adjustment, which he termed the biggest fraud in the country.