For tax year 2026, the Federal Board of Revenue (FBR) has clarified who qualifies as a liquidator and what legal responsibilities apply when handling assets of a taxpayer. These rules are laid out in Section 141 of the Income Tax Ordinance, 2001, and they impose strict compliance requirements to safeguard government tax revenue.
Here’s an interactive, step-by-step guide to help liquidators and stakeholders understand their duties and risks.
✅ Who Is Considered a Liquidator Under FBR Law?
Under Section 141(1), the following persons are treated as liquidators:
✔ A liquidator of a company
✔ A receiver appointed by a court or outside court
✔ A trustee for a bankrupt person
✔ A mortgagee in possession of assets
📌 These rules apply once the person takes possession of assets in Pakistan.
Mandatory Notice to FBR (Within 14 Days)
A liquidator must:
• Notify the Commissioner Inland Revenue in writing
• Within 14 days of:
o Appointment, or
o Taking possession of an asset in Pakistan (whichever occurs first)
🚨 Failure to notify on time can expose the liquidator to personal liability.
📬 FBR’s Response Timeline
Under Section 141(2):
• The Commissioner has three months to notify the liquidator
• The notice will specify the amount considered sufficient to cover current or future tax liabilities of the taxpayer whose assets are held
🛑 Restriction on Disposal of Assets
Under Section 141(3):
• A liquidator cannot sell, transfer, or part with assets
• Until FBR issues its tax notification
• Unless prior permission is obtained from the Commissioner
💰 Setting Aside Tax Amounts From Sale Proceeds
Once notified by FBR, the liquidator must:
🔹 Set Aside Tax Funds
• Reserve the amount specified by the Commissioner
• Or a lower amount later agreed upon
🔹 Accept Tax Liability
• The liquidator is liable to the extent of the reserved amount
• This liability relates to the tax of the original asset owner
🔹 Pay Priority Debts
• Debts that have legal priority over tax may still be paid first
(Section 141(4))
⚠ Personal Liability Risk for Liquidators
Under Section 141(5):
• If a liquidator fails to set aside the required amount
• Tthey become personally liable for that tax
• Liability is limited to the amount that should have been reserved
📉 When Sale Proceeds Are Insufficient
Under Section 141(6):
• If asset sale proceeds are less than the tax amount notified
• The liquidator’s obligation is limited to actual sale proceeds
📜 Overriding Legal Effect
Under Section 141(7):
• These provisions apply despite anything in any other law
• Section 141 overrides conflicting legal provisions
🧾 Treated as Assessed Tax
Under Section 141(8):
• Any amount due under this section
• Is treated as tax due under an assessment order
• Recovery rules apply accordingly
🧠 Why Liquidators Must Be Extra Careful in Tax Year 2026
With stricter enforcement expected:
• Liquidators face direct personal exposure
• Non-compliance can lead to tax recovery proceedings
• Early communication with FBR is critical
✅ Best Practices for Liquidators
✔ Notify FBR immediately upon appointment
✔ Do not dispose of assets without clearance
✔ Maintain detailed sale and payment records
✔ Reserve tax amounts before distributing proceeds
✔ Consult tax professionals early
📌 Final Takeaway
For tax year 2026, Section 141 makes it clear: liquidators act as gatekeepers of tax recovery. Failure to follow FBR procedures can result in personal liability—even when acting in a professional capacity.
Pro tip:
Timely notice and strict compliance are the safest ways to avoid legal and financial risk.
Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Tax laws and enforcement practices may change. Liquidators should seek professional advice for case-specific compliance.