Written by Hamza Shahnawaz in Taxation Audit says thousands of taxpayers escaped penalties for late sales tax returns and delayed tax payments ISLAMABAD: The Federal Board of Revenue (FBR) failed to impose and recover Rs3.54 billion in FBR penalties and default surcharges from thousands of taxpayers who either filed sales tax returns late or delayed payment of sales tax, according to the latest audit report of the Auditor General of Pakistan (AGP). The audit found that the irregularity involved 9,582 taxpayers across 19 FBR field offices during the audit of fiscal years 2022-23 and 2023-24. AGP Highlights Weak Enforcement Under Sections 33 and 34 of the Sales Tax Act, 1990, taxpayers who fail to submit sales tax returns by the due date are liable to a Rs10,000 penalty. Taxpayers found to have knowingly or fraudulently made false statements face a penalty of Rs25,000 or 100% of the tax involved, whichever is higher. Registered persons who fail to pay sales tax within the prescribed period are also required to pay a default surcharge in addition to the outstanding tax. According to the AGP, the FBR did not impose the required penalties and default surcharges despite taxpayers failing to file returns on time, submitting late returns or depositing sales tax after the due date. The audit further observed that the tax authority did not initiate legal proceedings against the registered persons, resulting in the non-imposition and non-recovery of FBR penalties and default surcharges amounting to Rs3.535 billion. The audit observations were…