The Federal Board of Revenue said Friday that the Finance Bill 2025 is still under discussion in the National Assembly and among business stakeholders.
In a statement, the FBR said it issued the clarification because “a number of news stories in the digital and print media give the impression that some of the amendments introduced in the finance bill are not understood well by the public at large.”
The FBR explained that legal provisions for arrest in cases of tax fraud already exist under Section 37A of the Sales Tax Act, 1990. The current law includes a procedure requiring the arrested person to be produced before a Special Judge within 24 hours.
The proposed amendment, however, introduces new checks by restricting the power to arrest. It now requires a prior inquiry and approval from the Commissioner of Inland Revenue (CIR) before any investigation can begin.
“Only on the basis of the findings of the inquiry, CIR will authorise the investigation, which would give the investigation officer the powers of an officer in charge of a police station under Code of Criminal Procedure, 1898 (Act V of 1898),” the FBR said.
The FBR added that arrests may only happen if the investigating officer has reason to believe tax fraud may have been committed and has obtained CIR approval.
The statement also noted that if an arrest is made in bad faith, the matter will be referred to the Chief Commissioner for a fact-finding inquiry.
“This shows that in contrast to the earlier provision where an Assistant CIR could arrest an offender, the new provisions bring transparency in the process by a mandatory prior inquiry and investigation and finally permission by the CIR,” the statement said.
“Moreover, certain changes and amendments are also necessary to reassure the compliant taxpayers that those evading taxes or involved in tax fraud are dealt with by the state with an iron hand.”
FBR Chairman Rashid Mahmood Langrial said he is open to further discussions on the recent tax law changes. He said the arrest clause, for example, could be revised to require approval from more than one senior officer.
“Furthermore, to ensure that the authorised tax officers do not misuse these powers against the compliant taxpayers and business community, the Prime Minister Shehbaz Sharif has formed a high powered committee, which will be headed by Minister for Finance and Revenue, to re-evaluate the proposed amendments and suggest adequate safeguards to prevent potential misuse of powers.”
The committee will include the Ministers of Law and Economic Affairs Division, Minister of State for Finance, SAPM Industries, and Chairman FBR.
According to the statement, the committee will also “examine various options to ensure that legal economic activities are not stifled and propose additional protective measures against unlawful use of authority. The committee will submit its recommendations to the Honorable Prime Minister in three days.”
