FBR urged to enforce third-party audits to curb tax evasion

ISLAMABAD: Chief Commissioner Income Tax Ayesha Farooq has written a letter to the Federal Board of Revenue (FBR), raising serious concerns about widespread misreporting in annual income tax returns, ARY News reported.

According to the letter, many taxpayers are submitting false or misleading information in their filings. “People live in lavish houses, use air conditioners around the clock, own expensive cars, branded clothing, luxury watches, and jewelry, and frequently travel abroad — yet their declared income and paid taxes do not reflect their lifestyle,” the letter states.

Ayesha Farooq highlighted that several individuals are exploiting the Universal Self-Assessment Scheme, under which returns are accepted without thorough checks. She proposed making third-party audits mandatory to curb such practices.

“The Pakistani economy is largely undocumented, with most income and expenditure occurring in cash. This makes it difficult to assess a person’s true financial standing,” the Chief Commissioner wrote.

She further advised the FBR to utilize information from neighbors, relatives, and colleagues to evaluate taxpayers more effectively.

The letter emphasized the need for a proper framework to benefit from social and lifestyle information. It also urged the FBR to make full use of the 2025 tax returns submitted by taxpayers.

Additionally, it recommended offering assurance to cooperative taxpayers that older returns would not be subjected to audits, thereby encouraging compliance.

Also Read: FBR compiles 57,000 jewellers’ data to crack down on tax evaders

Earlier today, the Federal Board of Revenue (FBR) compiled data on more than 57,000 jewellers across the country as part of a broader initiative to target tax evasion.

According to FBR sources, only 20,000 jewellers are currently registered with the tax authority, and of those, just 10,000 have filed their tax returns.

A large number of jewellers are reportedly underreporting their income to avoid taxes. FBR officials have indicated that strict action will be taken against those found guilty of tax evasion.