Islamabad, October 9, 2025 – Taxpayers across the country should brace for strict enforcement actions as the Inland Revenue (IR) officers of the Federal Board of Revenue (FBR) begin implementing provisions for the recovery of outstanding sales tax arrears under the Sales Tax Act, 1990.
According to official sources, the FBR has instructed field formations to exercise powers granted under Section 48 of the Act, which allows Inland Revenue officers to pursue various legal measures for the recovery of unpaid sales tax, penalties, and surcharges.
These actions are aimed at improving revenue collection and ensuring compliance among registered taxpayers.
Under Section 48, Inland Revenue officers are empowered to:
• Deduct the amount directly from any money owed to the taxpayer that is under government control.
• Issue written notices to individuals or entities holding funds on behalf of the defaulting taxpayer, directing them to remit the due amount to the tax department.
• Stop the removal or clearance of goods from business premises or customs ports until the outstanding amount is settled.
• Seal business premises or attach and sell movable or immovable property belonging to the taxpayer to recover dues.
• Attach and sell assets of guarantors, banks, or financial institutions if payments are not made under guarantees or financial instruments.
However, the law provides relief to taxpayers who have filed an appeal under Section 45B or Section 46, preventing recovery actions while the appeal is pending—provided that at least 10% of the disputed tax amount has been paid.
In cases where tax dues, penalties, or default surcharges cannot be recovered through the prescribed methods, the FBR may write off such arrears under specific rules authorized by the Board. Furthermore, Inland Revenue officers possess the same authority as civil courts under the Code of Civil Procedure, 1908, for the purpose of executing recovery proceedings.
The recovery provisions also extend to international cooperation, allowing assistance in collecting taxes based on requests from foreign jurisdictions under tax treaties or multilateral agreements.
Officials believe that the latest enforcement drive will tighten compliance and deter chronic defaulters. Businesses are urged to review their tax positions and clear outstanding liabilities promptly to avoid attachment of assets or suspension of business operations.