FBR unearths tax theft within Sindh’s mines

Mines’ lease-holders have failed to pay Rs51b in tax to the Centre over the last four years

KARACHI: The Federal Board of Revenue (FBR) has reportedly uncovered tax evasion worth over Rs60 billion within the Sindh mines and mineral development department as well as marriage halls and banquets.

According to sources, the FBR's Directorate General Intelligence and Investigation (DGI&I) and Karachi Inland Revenue Service (IRS) have found evidence of tax theft worth Rs51 billion within the remits of the mines department.

Around 300 companies excavating mineral resources in Sindh have reportedly failed to pay sales tax to the Centre, even though Rs300 billion in mineral resources have been mined from three districts of the province in the last four years.

The DGI&I has issued notices to the mines' lease-holders for the payment of 17 per cent sales tax. It has also confirmed the details of the mining companies with the mines department, while all regional tax offices have been taken on board for the registration of these companies.

Sources also informed The Express Tribune that the DGI&I had initiated monitoring of the supply of these minerals in real time. This supply is passing through exit-ways in Malir, Thatta, Jamshoro, Sukkur, Qambar-Shahdadkot, Khairpur and Tharparkar.

They added that the corresponding departments in Punjab, Balochistan and Khyber-Pakhtunkhwa were also involved in tax theft.

Marriage halls

Meanwhile, the DGI&I and Karachi IRS have reportedly also found evidence of tax evasion of Rs9.5 billion by high-end marriage halls and banquets over the last four years.

According to the directorate, 660 high-end marriage halls had been collecting taxes from their clients, but failed to pay the relevant income taxes to the federal government.

Notices have reportedly been issued to these marriage halls, while they will also be monitored by the FBR. As a result, the marriage hall owners will have to provide details of their bookings to the revenue board a month in advance.

Speaking to The Express Tribune, sources in the directorate said that the management of the marriage halls must pay five per cent of the cost of each ceremony as income tax. However, they added, only Rs41 million have been paid despite how lucrative the business is. Most of the marriage halls have not reported a single ceremony in the four years being investigated, while some of the others have only paid Rs10,000 in income tax in this duration, they added.

Suspicious transactions

Separately, the DGI&I and IRS also found evidence of suspicious bank transactions of over three billion rupees by a citizen.

Sources from the directorate claim that the suspect, Muhammad Mansha, failed to mention his source of income even during investigation by the revenue board. Mansha, a resident of Karachi, has allegedly committed tax theft worth at least one billion rupees by failing to mention bank transactions of three billion rupees in his tax records.

According to the sources, the directorate has registered a case against Mansha, also freezing 41 bank accounts that have been opened in his name. The relevant court has also reportedly given permission to seize his transferable and non-transferable properties.

The directorate had allegedly summoned the suspect, who is associated with transport logistics and forwarding, four times. However, he only appeared before it once, to request an extension. He further acquired bail against a surety of two million rupees when arrest warrants were issued for him.

The DGI&I is carrying out further investigations into other companies where Mansha serves as directors, sources added.

Published in The Express Tribune, February 25^th, 2020.