FBR Audit Report Uncovers Over Rs323 Billion in Tax Irregularities
- Audit identifies tax irregularities and weak internal controls worth over Rs323.34 billion.
- Only Rs43 billion recovered despite massive recoverable amount.
- Major shortfalls found in income tax, sales tax, super tax and customs duty collection.
- Audit recommends stronger monitoring, improved risk-based audits and tighter internal controls.
A government audit has uncovered tax irregularities, under-assessments and serious weaknesses in the Federal Board of Revenue’s (FBR) internal control system, identifying recoverable revenue exceeding Rs323.34 billion during the audit of fiscal year 2024-25.
According to the audit report issued by the Directorate General of Audit Inland Revenue and Customs, authorities identified tax-related irregularities amounting to Rs323.34 billion. However, only Rs43 billion was recovered between January and December 2025, highlighting a significant gap between identified recoveries and actual collections.
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The report stated that a risk-based audit of the FBR’s revenue and expenditure was carried out, covering Income Tax, Sales Tax, Federal Excise Duty (FED), Customs Duty and Sales Tax on Services collected in Islamabad.
Auditors found the FBR’s internal control framework to be weak and ineffective, with widespread instances of under-reported revenue, under-collection of sales tax, federal excise duty, default surcharge and penalties, along with several other compliance failures.
Key Audit Findings
| Category | Findings |
|---|---|
| Total recoverable tax irregularities identified | Rs323.34 billion |
| Amount recovered (Jan–Dec 2025) | Rs43 billion |
| Minimum tax not recovered | Rs15.29 billion (601 cases across 18 field offices) |
| Super tax not recovered | Rs117.77 billion (527 cases across 19 field offices) |
| Income tax under-collected due to inadmissible expense claims | Rs24 billion (276 cases across 16 field offices) |
| Sales tax irregularities involving blacklisted taxpayers | Rs41.78 billion (159 cases) |
| Sales tax not recovered | Rs13.03 billion (870 cases across 20 field offices) |
| Customs duty under-collected due to misclassification and undervaluation | Rs3.56 billion (9,831 cases) |
According to the findings, 18 field offices failed to recover minimum tax worth Rs15.29 billion in 601 cases. In addition, 19 field offices did not collect Rs117.77 billion in super tax across 527 cases.
The report further revealed that 16 field offices under-collected Rs24 billion in income tax in 276 cases due to the acceptance of inadmissible expense claims. Billions of rupees in additional revenue were also lost because of incorrect determination of taxable income and improper allocation of expenses and input tax.
In the sales tax sector, inadequate monitoring of input tax claims made by blacklisted taxpayers resulted in irregularities amounting to Rs41.78 billion in 159 cases. Separately, 20 field offices failed to recover Rs13.03 billion in sales tax across 870 cases.
The customs audit also highlighted significant revenue losses. Misclassification of imported goods and under-declaration of import values resulted in under-collection of Rs3.56 billion in customs duties across 9,831 cases. Additional losses were attributed to inadmissible duty and tax exemptions, failure to recover warehouse surcharge on delayed clearance of goods, and the non-disposal of confiscated goods.
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