Sri Lanka’s tax authority has been deprived of revenue worth more than Rs 3 billion by last year due to dishonoured cheques, the national audit office has found.

The number of dishonoured cheques received by the Inland Revenue Department (IRD) had risen from 4494 recorded in 2015 to 8060 in June 2019, according to the auditor general’s report.

Taxpayers remit funds to the IRD’s Revenue Collection Account, and once the details on the payments made by taxpayers are furnished by banks, the tax files are updated.

“…it was observed that the internal control systems (of the IRD) for looking into the measures on their settlement and regarding follow up actions were not properly in operation,” the report read.

As a result, Value Added Taxes worth Rs 2.03 billion, Nation Building Taxes worth Rs 427.8 million, and Income Taxes worth Rs 317.8 million were among the revenue lost by the government.

Accordingly, the auditor general has recommended adopting money collecting methods such as bank drafts, other technical payment methods in addition to cheques to address this problem.

He has also recommended suspending bank accounts, suspending or taking over properties of taxpayers, and initiating court action relating to the dishonoured cheques exceeding Rs 500,000 in value.