ISLAMABAD – The Federal Board of Revenue (FBR) has been forcefully restrained from making any arrest in tax fraud cases unless a formal inquiry is completed—marking a major policy shift sparked by fierce public backlash.
The development came as part of the newly approved Finance Bill 2025, which will come into force on July 1, 2025. The amended law mandates that no person shall be subjected to arrest before the conclusion of an official inquiry, effectively placing strict checks on the FBR’s prosecutorial powers. Legal experts are hailing this change as a much-needed move towards transparency and due process in Pakistan’s tax system.
The law further grants the accused the right to seek bail or release through courts under provisions of Sections 497 and 498 of the Criminal Procedure Code. This ensures judicial oversight in cases where the FBR initiates proceedings against individuals or businesses suspected of tax fraud.
The FBR, often criticized for its unchecked authority, will now require clearance from a three-member committee before issuing any arrest warrant. The committee may only authorize an arrest if the suspected tax loss exceeds Rs 50 million and if the accused either refuses to cooperate after three formal notices, tries to abscond, or is suspected of attempting to tamper with critical evidence.
This reform is seen as a balancing act by the government—retaining deterrence against tax fraud while preventing harassment of taxpayers during the inquiry stage. The Finance Bill explicitly states that the goal of prosecution under sections 37A and 37B remains to deter and punish serious tax violations.
Additionally, the amended legislation introduces harsher penalties for tax fraud and non-compliance by courier services and online payment intermediaries. In another bold move, the FBR Commissioner is now empowered to suspend bank accounts of unregistered persons for three consecutive working days through written orders. This suspension may be repeated twice more at weekly intervals to pressure non-filers into compliance.
As the FBR recalibrates its strategy, the emphasis is now clearly shifting from premature arrest to comprehensive inquiry—a signal that the state is serious about making tax enforcement both fair and firm.