KARACHI/ISLAMABAD – In a major compliance drive, the Federal Board of Revenue (FBR) has issued ‘nudging’ notices to around 11,000 businesses and individuals, urging them to rectify anomalies in their recent sales tax filings or risk heavy penalties and enforcement action.
These notices—non-binding but serious in tone—are part of a newly adopted strategy by FBR Chairman Rashid Langrial to plug revenue leakages. The chairman has deployed a sophisticated risk management system that uses advanced data analytics to identify mismatches and underreporting in tax returns over the last five years.
The notices, mostly issued by corporate tax offices in major cities, including Karachi, Lahore, and Islamabad, come amid tense discussions with the business community over tax reforms. The timing has drawn criticism, especially from trade associations who say they were not given prior warning.
According to the FBR, the anomalies detected include overstated exempt sales, excessive claims of reduced-rate sales, low value additions compared to purchases, and inflated input tax and refund claims.
“Please correct anomalies in your sales tax return. Ignoring this will be taken as a choice to not comply with the law,” read a standard message from the FBR. It warned that non-compliant businesses could face harsh penalties such as bank account freezes, property sealing, tax audits, or even the posting of tax officers inside their premises.
Jawed Bilwani, President of KCCI, criticized the FBR’s approach, especially its use of sales benchmarks to compare businesses. “You cannot standardize sales performance across different brands or business models. Sales are subjective to brand value and product quality,” he said.
FBR, however, insists the process is fully automated and free of human bias. The aim, it says, is to promote behavioural change and enhance tax compliance without resorting immediately to intrusive methods.
Initial feedback shows the strategy may be working—FBR claims that nudging has already helped increase tax return submissions for July. A complete review will follow after the extended deadline ends on August 4.
In its analysis, the FBR also raised concerns over an unusual rise in reduced-rate or exempt sales and noted a trend of inflated credit and debit notes. Some businesses, especially in the cement sector, are already under onsite monitoring, which the FBR says has improved collection despite stagnant sales.
To further tighten enforcement, the FBR has reassigned over 250 officers, ensuring only top-rated officials are placed in key operational roles under a merit-based classification system.
The revenue authority says its focus will remain on narrowing the compliance gap among existing taxpayers, as part of wider efforts to expand Pakistan’s tax base and reduce reliance on indirect taxation.