ISLAMABAD: The “tax fraud” would cover any person, who would make taxable supplies without getting sales tax registration from the Federal Board of Revenue (FBR).

The updated Sales Tax Act 1990 has incorporated sales tax amendments introduced through Finance Act 2024 including new definition of “tax fraud”.

The scope of definition of “tax fraud” has been expanded under the revised Sales Tax Act 1990.

New section added to ST Act 1990: Concept of ‘investigative audit’ introduced

According to the updated Sales Tax Act 1990 issued by the Federal Board of Revenue (FBR), the “tax fraud” means intentionally understating or underpaying the tax liability or overstating the entitlement to tax credit or tax refund in contravention of duties or obligations imposed under this Act by way of submission of false return, statements or false documents or withholding of correct information or documents to cause loss of tax and includes:

(a) Suppression of supplies that are chargeable to tax under Sales Tax Act.

(b) False claim of input tax credit.

(c) Making taxable supplies of goods without issuing any tax invoice, in violation of the provisions of Sales Tax Act or the rules made thereunder.

(d) Issuance of any tax invoice without supply of goods leading to inadmissible claim of input tax credit or refund.

(e) Evasion of tax by availing undue input tax credit or obtaining inadmissible refund by any means or methods other than that covered under clauses (a) to (d).

(f) Collection of any amount as tax but failing to deposit the same in the prescribed manner beyond a period of three months from due date of payment of tax.

(g) Falsification or causing falsification of invoice or substitution of financial records or production of fake accounts or documents or furnishing of any false information through human, mechanical or electronic means with an intention to evade tax due or claim inadmissible refund.

(h) Tampering with or destroying of any material evidence or documents required to be maintained under Sales Tax Act or the rules made thereunder through human or digital means.

(i) Acquisition, possession, transportation, disposal or in any way removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner dealing with, any goods in respect of which there are reasons to believe that these are liable to confiscation under Sales Tax Act or the rules made thereunder.

(j) Making of taxable supplies without getting registration under Sales Tax Act.

(k) Intentional doing of any act or causing to do an act or omitting to take any action or causing the omission to take any action to cause loss of tax under Sales Tax Act.

Explanation: Any act or omission mentioned in this clause shall be treated as intentional unless the person accused of tax fraud proves that he had no intention, motive, knowledge, or reason to believe that he was committing a tax fraud, the FBR added.

Copyright Business Recorder, 2024