Islamabad, June 16, 2025 – The Federal Board of Revenue (FBR) has revealed that several influential individuals, including a former senator and ex-customs official, were involved in high-value tax fraud, prompting renewed debate over the FBR’s proposed arrest powers in the Finance Bill, 2025.
During a meeting of the Senate Standing Committee on Finance, FBR Chairman Rashid Mehmood Langrial strongly defended the proposed authority to arrest individuals involved in tax fraud after the completion of an inquiry. He emphasized that fraud on such a scale is a criminal offense and must be treated accordingly.
Langrial revealed that a former customs officer, now in FBR custody, had guided a shoe manufacturer on how to evade millions in sales tax, a scheme which the FBR has documented with video evidence. He stressed that such actions warrant immediate legal consequences and highlighted that one of the culprits is a high-profile figure who previously served as a senator.
Currently, the law allows FBR officers to arrest suspects during the inquiry stage. However, the proposed amendment in Clause 37A seeks to shift this power to the investigation stage and introduces a requirement for the Commissioner’s approval. State Minister for Finance Bilal Azhar Kiyani defended the amendment, stating it would uphold procedural fairness and reduce the possibility of arbitrary arrests by low-ranking officers.
The committee, chaired by Senator Saleem Mandviwalla, rejected the FBR’s proposal in its current form. Senators demanded a well-defined threshold for arrests in tax fraud cases. The FBR proposed a minimum fraud amount of Rs 10 million for an arrest to be permissible.
Senator Farooq H. Naek of the PPP opposed the FBR’s powers, arguing that arrests in tax fraud cases should only occur with judicial authorization. He compared the FBR’s sweeping powers to previously amended NAB laws that were seen as overly broad and intrusive.
Despite pushback, Langrial insisted that tax fraud of Rs 1 billion or more must be met with strong enforcement, including up to 10 years’ imprisonment. He pointed out the irony of punishing minor crimes severely while hesitating on major economic offenses.
The Finance Bill also proposes harsh penalties: 100% fines and up to 10 years’ imprisonment for severe fraud, along with the empowerment of special judges for prosecution.
Meanwhile, the FBR has proposed further enforcement measures, such as sealing business premises, freezing bank accounts, and restricting property transfers of unregistered taxpayers. However, Langrial assured that no punitive action would be taken without a public hearing and consultation with business chambers.
In conclusion, the Senate committee advised the FBR to revisit its proposals in consultation with the Attorney General and Finance Minister, and to present revised suggestions soon.