ISLAMABAD: Concessions on import duties, exemptions and the zero rating of tax notified under the statutory regulatory orders (SROs) caused a loss of Rs5.8 billion to the national exchequer during the fiscal year 2013-14.
This was disclosed in an audit report submitted to the Public Accounts Committee (PAC) on Tuesday.
“Ten Model Custom Collectorates (MCCs) extended the benefit of exemptions and concessions of duties and taxes to different parties under certain SROs without fulfillment of requisite conditions which resulted in non-realisation of revenue of Rs5.8 billion,” the report stated.
Defending the exemptions, however, Federal Bureau of Revenue (FBR) Chairman Nisar Mohammad Khan said a sizeable amount related to the defence import.
He said due to security reasons, neither the defence forces disclosed any details about their import nor the customs authorities could check items in consignments meant for the forces. Therefore, the FBR can charge a certain amount of tax on the defence import.
“There is a system based on mutual understanding under which a lump sum amount is imposed on the defence import as a tax,” Mr Khan explained.
He, however, said since the policy related to the issuance of SROs by the FBR had been abolished, it was not possible for the board to offer such concessions any longer.Audit officials, on the other hand, described the FBR stance as ambiguous.
They said under the SROs, the FBR exempted private parties from taxes on the import of tables, chairs and other items which were produced locally. Under the government policy, the FBR cannot offer any concession on the import of products that are produced locally as it would discourage the indigenous manufacturing. PAC member Dr Arif Alvi asked the FBR to clarify its position on the loss of Rs5.8 billion as it would create doubts on the transparency in the revenue board.
“This may be an outcome of corruption, corrupt practices and incompetency of the officials at the helm of affairs,” he said.
But the FBR chairman claimed that the audit authorities had exaggerated the amount as there was sufficient material on record with the FBR to justify the exemptions.
