Islamabad, June 20, 2025 — The Federal Board of Revenue (FBR) on Friday issued a detailed clarification regarding the arrest provisions proposed in the Finance Bill 2025, aiming to address widespread confusion and public concern over its interpretation.
According to the FBR, the Finance Bill 2025 is currently under deliberation in the National Assembly and has attracted significant attention from business circles and the media. The revenue authority noted that some sections of the public and press may have misunderstood key amendments, especially those related to the arrest powers of tax authorities.
FBR explained that under the existing legal framework, Section 37A of the Sales Tax Act, 1990 already permits the arrest of individuals involved in tax fraud, along with clearly defined procedures including immediate notification and production before a Special Judge within 24 hours. However, the new provision introduced in the Finance Bill 2025 actually places additional checks and balances on such powers.
Under the proposed amendment, arrest powers would only be exercised after a mandatory inquiry and with prior approval of the Commissioner Inland Revenue (CIR). The CIR must be satisfied with the findings of the inquiry before authorizing an investigation. The investigating officer would then be vested with powers equivalent to those of an officer in charge of a police station, as outlined in the Code of Criminal Procedure, 1898.
Importantly, the Finance Bill 2025 includes safeguards to prevent abuse of authority. In case of mala fide arrests, the matter must be referred to the Chief Commissioner for a fact-finding inquiry. This marks a significant shift from the previous provisions, where lower-ranking officers such as Assistant CIRs had unilateral arrest powers without preliminary oversight.
To further protect compliant taxpayers and ensure fair implementation of the Finance Bill 2025, Prime Minister Shehbaz Sharif has constituted a high-powered committee led by the Minister for Finance and Revenue. This committee includes the Ministers for Law, Economic Affairs, the Minister of State for Finance, SAPM on Industries, and the Chairman FBR. Their task is to review the proposed arrest powers, recommend improvements, and ensure legitimate business activities are not hampered.
FBR Chairman Rashid Mahmood Langrial reiterated the department’s commitment to transparency and fairness. He expressed openness to revising contentious provisions, including introducing multi-tiered approval mechanisms for arrests under the Finance Bill. The FBR remains dedicated to strengthening tax enforcement while safeguarding the rights of Pakistan’s honest taxpayers.