The Auditor-General of Pakistan (AGP) has detected variation in indirect tax collections for 2008-09, maintained by the Federal Board of Revenue's (FBR) electronic database and those mentioned in the Year Book (2008-2009) of the FBR.
Sources told Business Recorder here on Saturday that the AGP office framed audit objections to the variations in tax collection figures compiled by the Pakistan Revenue Automation Limited (PRAL), a subsidiary of the FBR, and those mentioned in the Year Book 2008-2009.
The figures compiled by the databank of PRAL, the IT arm of the FBR, are different from the tax collection data published in the Year Book of the FBR. The issue was recently discussed during a meeting between the AGP and the FBR to examine the audit observations of the AG office, sources said.
According to initial audit observations of the AG office, the sales tax collection was Rs 482.8 billion during 2008-2009 as compiled by PRAL as compared to Rs 452.3 billion reported in the Year Book, reflecting a difference of Rs 30.5 billion. The Federal Excise Duty (FED) collection was Rs 133.7 billion as per FBR electronic data as compared to Rs 116.1 billion in Year Book, reflecting variation of Rs 17.6 billion.
The customs duty collected was Rs 117.4 billion as per PRAL data and Rs 148.3 billion in Year Book, showing variation of Rs 30.9 billion; and income tax collection was Rs 397.3 billion as per electronic database against Rs 440.3 billion in Year Book of FBR for 2008-2009, reflecting a difference of Rs 43 billion.
When contacted, sources in the FBR said that the difference in data was because of the fact that the computer data available in the operational data store (ODS) consist of payments made in the banks only, whereas the figures reported in the Year Book also contain adjustment figures. Thus, the said variation is an obvious fact due to book adjustment figures which are not computerised and hence not reflected in the ODS reports. The ODS is a databank of the FBR revenue collection for compilation of reports on national level, they added.
Sources said that the AG office has compiled a report on the "Un-authentic figures of collection of indirect taxes (Sales Tax) appeared in Operational Data Storage (ODS) of PRAL". According to sources, the STARR is a computer program which verifies sales tax invoices and other information for payment of sales tax refunds. On the other hand, the PRAL is a subsidiary of the FBR which is engaged in automation and data compilation of taxes.
The AG office report said that in STARR (Sales Tax Automated Refund Repository computer system), verification of invoices, sales amount and sales tax paid is carried out by the Central Repository of STARR on the basis of sales tax record maintained in main database of PRAL administered by Operational Data Storage.
To assess the authenticity of data/record relating to sales tax contained in the said main database of ODS, information relating to collection of sales tax, customs and income tax for the fiscal year 2008-2009 was taken and compared with the figures of sales tax, customs, and income tax as appeared in Year Book of FBR and Financial Statements of Federal Government prepared by the Accountant General Pakistan Revenues/Controller General of Accounts. A huge variation among the figures of sales tax, customs and income tax appeared in databases maintained by ODS and that in Year Book of FBR and Financial Statements of Federal Government, the report stated.
The report said that the variation shows that collection figures as per ODS (PRAL) is incorrect and not authentic. Consequently, all verifications carried out by Centralised Repository of STARR is based on this unauthentic record which is on the higher side in case of sales tax and federal excise and is on very low side in case of income tax. When amount of sales tax is on higher side, then ultimately amount of sales would also be on higher side which may form basis of verification of greater (incorrect) amount of sales and the same would result in grant of excess/incorrect refunds defeating the main purpose of STARR.
Responding to the observations of the AG office, the FBR said that the figures published in the Year Book 2008-2009 also include various manual collections such as book adjustments which are not recorded in the computerised system and, therefore, are not available in the ODS. Thus, at the macro level the ODS figures cannot, at this time, match the Year Book. For refund processing, STARR has to do precise accounting at the level of specific taxpayer account, his return and refund claim. For this STARR goes to the source transactions at the micro level and, if any discrepancies are noted, then those are rectified before the claim is processed. Therefore, the ODS figures are reliable and correct for the purposes of refund processing because in all cases where a refund is involved the discrepancies, if any, are properly resolved.
The FBR said that a macro level discrepancy does not mean that even at the micro level, in cases where refund is involved, the ODS data is incorrect. Therefore, the observation made in the audit is not valid. The PRAL management stated that the figures published in the Year Book also include various manual collections which are not available in the ODS. Thus, at macro level, ODS figures can not match the Year Book. For refund processing, STARR has to do precise accounting at the level of specific taxpayer account, his return and refund claim.
For this, STARR goes to the source transactions at the micro level and if any discrepancies are noted, then those are rectified before the claim is processed. Therefore, the ODS figures are reliable and correct for the purpose of refund processing because in all cases where a refund is involved the discrepancies, if any, are properly resolved. A macro level discrepancy does not mean that even at the micro level, in cases where refund is involved, the ODS data is incorrect.
Responding to the comments of PRAL, AGP observed that according to explanation given by PRAL, figures of ODS should be less than that of Year Book but the actual position is quite the reverse. The ODS figures should be, in any case, less than that of Year Book as well as Financial Statements because both include the manual collections and book adjustments as well.
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