FBR Fails to Recover Rs. 20.56 Billion in Withholding Tax From Defaulting Agents
The Federal Board of Revenue (FBR) failed to recover Rs. 20.56 billion in withholding tax from defaulting withholding agents during audits covering FY24 and FY25, according to an official audit report.
The audit found that 681 withholding agents across 19 FBR field offices either failed to deduct withholding tax while making payments to suppliers, service providers, and contractors or deducted the tax but did not deposit it into the government treasury within the prescribed time.
As withholding agents are legally responsible for remitting the deducted tax, the audit said the department was obligated to recover the outstanding amount.
According to the report, the FBR did not initiate recovery proceedings in time, resulting in a revenue loss of Rs. 20.561 billion. The irregularities were highlighted to the department between February and November 2025.
In its response, the FBR said legal proceedings had been initiated to recover the outstanding Rs. 20.561 billion from the defaulting withholding agents.
The Departmental Accounts Committee (DAC) directed the FBR during meetings held in July and December 2025 and January 2026 to expedite legal proceedings and submit a compliance report. However, the audit noted that no further progress had been reported by the time the report was finalized.
The audit also pointed out that similar irregularities have been reported in audit reports for the past five years, covering FY21 through FY25, with a cumulative financial impact of Rs. 134.5 billion. It termed the recurrence of the issue a matter of serious concern and recommended expediting legal action against defaulting withholding agents while strengthening the FBR’s desk audit mechanism to prevent future revenue losses.
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