Many citizens in Pakistan take the Federal Board of Revenue (FBR) lightly, especially when it comes to concealment of income. However, under Pakistan’s tax laws, FBR does have the legal authority to arrest taxpayers if a serious income tax crime is established.
The Income Tax Ordinance, 2001 (updated for tax year 2026) clearly defines the power, conditions, and procedure of arrest under Sections 203B and 203C.
When Can FBR Arrest a Taxpayer? (Section 203B)
Under Section 203B, a taxpayer may be arrested only when all legal conditions are fulfilled.
Conditions for Arrest
FBR can arrest a taxpayer if:
• An audit is conducted under Section 177(8) read with Section 214C
• An assessment or amended assessment is made under Section 121 or 122
• The assessing officer records a clear finding of concealment of income
• The concealment results in non-payment of tax exceeding:
| Taxpayer Status | Tax Amount Threshold |
| Filer | Rs. 100 million or above |
| Non-filer | Rs. 25 million or above |
⚠ Arrest is not automatic. It requires material evidence and approval from a high-level committee.
Approval Committee for Arrest
No arrest can be made without written approval of a special committee comprising:
• Minister for Finance and Revenue
• Chairman, Federal Board of Revenue
• Senior-most Member of the Board
This safeguard ensures arrests are used only in serious tax crimes.
Arrest of Company Directors and Officers
If the offender is a company, FBR can arrest:
• Any director or officer
• Who is personally responsible for actions leading to concealment of income
🔔 Important: Arrest of directors does not absolve the company from payment of tax, default surcharge, or penalties.
Can the Offence Be Compounded Instead of Arrest?
Yes. Under Section 203B(4):
• The Chief Commissioner, with Board approval, may compound the offence
• Compounding is possible before or after recovery proceedings
• The taxpayer must pay:
o Due tax
o Default surcharge
o Penalty as determined under law
This provision allows resolution without arrest, provided dues are cleared.
Procedure of Arrest – Section 203C Explained
FBR must strictly follow the Code of Criminal Procedure, 1898, along with safeguards under Section 203C.
Key Procedural Safeguards
1. Production Before Court
• Arrested person must be produced before:
o Special Judge, or
o Nearest Judicial Magistrate
• Within 24 hours of arrest (excluding travel time)
2. Bail Rights
• The Special Judge may:
o Grant bail (with or without surety), or
o Refuse bail with recorded reasons
• Bail may later be cancelled after hearing the accused
3. Custody Limits
• Inland Revenue officer may seek remand
• Maximum custody for inquiry: 14 days
Investigation and Inquiry Powers
During inquiry, Inland Revenue officers have powers similar to police officers, including:
• Recording statements
• Conducting investigations
• Recovering documents and evidence
If no sufficient evidence is found:
• The accused must be released on bond
• A report is sent to the Special Judge for discharge
Register of Arrests & Judicial Oversight
Every arrest must be recorded in a mandatory “Register of Arrests and Detentions”, including:
• Time and date of arrest
• Evidence collected
• Witness details
• Day-to-day inquiry progress
This register can be produced before the Special Judge at any time.
Key Takeaways for Taxpayers
✅ FBR can arrest taxpayers, but only in serious, high-value tax crimes
✅ Arrest requires audit findings, evidence, and top-level approval
✅ Taxpayers have full legal rights, including bail and judicial oversight
✅ Offences may be compounded by paying tax, surcharge, and penalty
✅ Ordinary mistakes or small disputes do not lead to arrest
Use this checklist to stay protected:
• Declare full income accurately
• Respond to FBR audit notices
• Avoid concealment of income
• Maintain proper documentation
• Consult tax professionals for large transactions
Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. For official interpretation and case-specific guidance, consult the Federal Board of Revenue (FBR) or a qualified tax professional.