FBR issues SOPs for tax fraud investigations 

The Federal Board of Revenue (FBR) has issued standard operating procedures (SOPs) for initiating inquiries, investigations, prosecutions and arrests in tax fraud cases under Section 37A of the Sales Tax Act during assessment proceedings.

The instructions were circulated by the Inland Revenue (Operations) Wing to field formations and the Directorate General of Intelligence and Investigation Inland Revenue, outlining the process for handling criminal proceedings related to tax fraud.

Under the SOPs, criminal prosecution in such cases will be processed by the Directorate General of Intelligence and Investigation Inland Revenue rather than the FBR’s Operations Wing. Cases identified during assessments will be forwarded to the directorate, which will proceed in accordance with the procedures prescribed under the Finance Act 2025 and related notifications and circulars.

Officials said the SOPs do not bypass existing mechanisms that require consultation with notified committees representing business and trade groups. They added that the procedures maintain the framework already adopted after discussions between the government and the business community.

According to officials, court directives have separated civil and criminal liabilities in tax matters. Civil liability against a taxpayer must be established first before any criminal liability is pursued.

The recent amendments to Section 37A introduced through the Finance Act 2025 have raised concerns among trade bodies and business associations regarding the possibility of misuse of authority and the broader definition of tax fraud.