Karachi, December 20, 2023 – A commissioner of the Federal Board of Revenue (FBR) is now empowered to issue arrest warrants for tax defaulters.
The FBR recently released updated Income Tax Rules for the tax year 2024, outlining a detailed procedure for the arrest and detention of defaulters under Rule 183.
Rule 183, titled “Notice to show cause,” establishes a stringent process to be followed before resorting to the extreme measure of arrest and detention. According to the rule, no order for the arrest and detention of a defaulter shall be made unless the Commissioner has issued and served a notice upon the defaulter. This notice requires the defaulter to appear before the Commissioner on a specified date and show cause as to why they should not be committed to civil prison.
The Commissioner can only proceed with the arrest and detention if certain conditions are met. These conditions include instances where the defaulter has dishonestly transferred, concealed, or removed any part of their property to obstruct the execution of the notice. Additionally, if the defaulter has the means to pay the arrears but refuses or neglects to do so, the Commissioner can authorize arrest.
Notably, a warrant for the arrest of the defaulter may also be issued if the Commissioner is satisfied, based on affidavit or other evidence, that the defaulter is likely to abscond or leave the local limits of the Commissioner’s jurisdiction with the aim of delaying the execution of the notice.
In cases where the defaulter fails to appear in compliance with the issued notice, the Commissioner is empowered to issue a warrant for their arrest. However, the rule ensures that the arrested individual is brought before the Commissioner within twenty-four hours of the arrest, excluding the time required for the journey. A provision allows for the immediate release of the defaulter if they pay the amount specified in the warrant of arrest to the arresting officer.
The warrant of arrest, as per the rule, is required to be in a prescribed form, ensuring a standardized and legal process for the issuance and execution of arrest warrants.
This move by the FBR is seen as a robust step towards enhancing tax compliance and addressing persistent issues related to tax evasion. The authority vested in the Commissioner is aimed at ensuring that defaulters fulfill their tax obligations and contribute to the national revenue. Critics argue that such measures should be accompanied by efforts to simplify tax procedures and create a more transparent and business-friendly environment to encourage voluntary compliance.
As the FBR continues to evolve its strategies for effective tax administration, the implementation and impact of these updated rules will be closely monitored by stakeholders and the public alike.
