The government has suffered a loss of over Rs 20 billion due to suspension of sales tax field audit since July 2004, which also contributed towards deterioration of the tax-to-GDP ratio during last two years.
Sources told Business Recorder on Sunday that the figure has been specified in a report of the Directorate-General of Inspection and Audit, Indirect Taxes, which has strongly criticised suspension of sales tax audit.
They said that the Board had scrapped the report because it contained 'anti-reforms material'. The Board did not agree with the findings of the report. As such the entire study has been quashed. That is why the annual report (2004-2005) of the Directorate General, Inspection and Audit, Indirect Taxes has not been released yet, they added.
Sources said that it has been decided that the report would not be issued as it contains highly objectionable remarks on the reform initiatives and suspension of sales tax audit.
About the suspension of sales tax audit, according to sources, the report said that "the revenue loss due to stoppage of audit is in no way less than Rs 10 billion per annum. Lack of accountability and payment of substandard emoluments were the main causes of rampant corruption by auditors besides harassment to taxpayers".
Sources were of the view that the figure of Rs 10 billion loss per year due to suspension of audit was based on annual detection and audit observations of Rs 10-15 billion in 2003-04.
The detection had led to recovery of billions of rupees in sales tax in 2003-04. If Rs 10-15 billion sales tax detection was made in the past year, then minimum loss due to suspension of field audit would definitely come to over Rs 10 billion per annum, sources added.
Referring to the report, they said that it had also specified that the corrupt auditors and their sponsors (some tax officials) have not been punished since the suspension of field audit. The net result is rampant evasion by unscrupulous persons either by not paying the due amount of tax or by fraudulently claiming refunds. This also contributed towards deterioration in the tax-to-GDP ratio, they said.