Islamabad, August 31, 2025 – The Federal Board of Revenue (FBR) has clarified that tax officers are not obligated to issue a notice before initiating recovery proceedings for short-paid sales tax under Section 11A of the Sales Tax Act, 1990.
The clarification came through the updated version of the Sales Tax Act, incorporating the latest amendments introduced via the Finance Act 2025. According to the revised legal framework, any short-paid amount of tax, as reflected in a taxpayer’s filed return, becomes liable for immediate recovery.
Section 11A states that if a registered person underpays the tax amount compared to what is due, the outstanding balance, along with default surcharge, shall be recovered directly. This can be done by halting the removal of goods from the taxpayer’s premises or attaching their business bank accounts — all without issuing a show cause notice.
However, the provision makes it clear that while recovery of tax and surcharge can proceed without prior notice, the imposition of penalties under Section 33 of the Act cannot occur without first serving a proper notice.
Legal experts believe that the move aims to expedite tax collection and curb revenue leakages, but they also caution that strict compliance measures must be ensured to protect businesses from arbitrary recovery actions.
The FBR maintains that these changes will enhance efficiency in tax administration and ensure swift resolution of discrepancies in declared liabilities.
Disclaimer: This article is based on information available from official FBR updates and does not constitute legal or financial advice. Readers are encouraged to consult professional tax advisors for guidance specific to their circumstances.