ISLAMABAD: The FBR has made it crystal clear that certain safeguards are in place to ensure avoidance of misuse of arrest powers in the proposed Finance Bill 2025-26.
According to an official statement issued on Saturday, the Finance Bill is currently being discussed in the National Assembly and business circles. Several news stories in digital and print media suggest that some of the amendments introduced to the bill are not well understood by the general public. For instance, the legal provisions for the arrest of those involved in a tax fraud have already been provided under Section 37A of the Sales Tax Act, 1990 along with an elaborate procedure to be followed after the arrest which involves intimating to the special judge immediately and the production of such a person before the judge within 24 hours. However, the proposed amendments now restrict the powers of an officer to arrest by making a prior inquiry after approval of the Commissioner Inland Revenue (CIR). Only on the basis of the findings of the inquiry, the CIR will authorize the investigation which would give the investigation officer the powers of an officer incharge of a police station under Code of Criminal Procedure, 1898 (Act V of 1898). The arrest can only be made with the prior approval of the CIR if the investigation officer has reasons to believe that a tax fraud has been committed by a person.
The new legal provision further provides that if the arrest is mala fide, 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 final permission by the CIR.
Moreover, certain changes 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 has expressed willingness to discuss the recent changes made in the tax laws and introduce changes wherever needed, for example, the provisions related to arrest could be revised to mandate the permission of multiple senior officers before any arrest. Furthermore, to ensure that these powers are not misused by the authorized tax officers against the compliant taxpayers and business community, Prime Minister Shehbaz Sharif has formed a high-powered committee which will be headed by the minister for Finance and Revenue to re-evaluate the proposed amendments and suggest adequate safeguards to prevent potential misuse of powers. The other members of the committee will include ministers of Law and Economic Affairs Division, minister of state for Finance, SAPM Industries and chairman FBR. 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 prime minister in three days.
The FBR is committed to safeguarding the legal rights of the compliant taxpayers and increasing tax collection and state revenues by discouraging non-compliant taxpayers and acknowledging those who are paying their due share to the state.
