Section 146A of the Income Tax Ordinance, 2001 allows tax recovery proceedings to begin at any time, while Section 146B empowers the FBR to introduce incentives for settling tax arrears.
ISLAMABAD: The Federal Board of Revenue (FBR) may initiate tax recovery proceedings at any time during tax year 2027 under the Income Tax Ordinance, 2001.
The FBR has issued the Income Tax Ordinance, 2001, updated up to June 30, 2026, for tax year 2027, covering the period from July 1, 2026, to June 30, 2027. Section 146A outlines the rules governing the initiation, validity and amendment of tax recovery proceedings.
FBR may initiate tax recovery at any time
Under Section 146A(1), proceedings for the recovery of tax under the relevant part of the Ordinance may be initiated at any time. The provision does not prescribe a specific period within which recovery proceedings must commence.
Section 146A(2) further empowers the Commissioner to amend a recovery certificate issued under Section 138A at any time. The Commissioner may also recall an existing certificate and issue a fresh one, as considered appropriate.
Taxpayers cannot challenge recovery certificates before revenue officer
Section 146A(3) states that a taxpayer cannot question the validity or correctness of a recovery certificate issued under Section 138A before the District Officer (Revenue).
The restriction also applies to an amended certificate or a fresh certificate issued by the Commissioner under the relevant provisions.
Multiple tax recovery methods may be used
Under Section 146A(4), the different methods of tax recovery provided in the Ordinance are neither mutually exclusive nor intended to affect other laws currently in force concerning the recovery of debts owed to the government.
The Commissioner may therefore use any available recovery method even when tax due from a taxpayer is already being recovered through another method.
FBR may introduce tax arrears settlement incentives
Section 146B of the Income Tax Ordinance, 2001, separately empowers the FBR to introduce a tax arrears settlement incentives scheme, subject to the provisions of the Ordinance.
Under this section, the Board may formulate a scheme covering the recovery of tax arrears or withholding taxes, including the waiver of default surcharge or penalties imposed on such amounts.
Section 146B(2) further authorises the Board to make rules under Section 237 to implement the scheme.
These provisions establish the legal framework for initiating and managing tax recovery proceedings while allowing the FBR to introduce settlement incentives in accordance with the law.