Section 196 of the Income Tax Ordinance, 2001, updated up to June 30, 2021, explicitly declares that obstructing an income tax authority in the discharge of their functions is now a punishable offense.
The penalties upon conviction include a fine or imprisonment for a term not exceeding one year, or both.
The Finance Act, 2021, brought about several amendments to the Income Tax Ordinance, 2001, with Section 196 emerging as a critical provision in the campaign against interference with tax authorities. The revised text of Section 196 reads: “Prosecution for obstructing an income tax authority. —A person who obstructs an income tax authority in discharge of functions under this Ordinance shall commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding one year, or both.”
This amendment is a robust response to any attempts to obstruct or impede the functioning of income tax authorities in the course of their duties. It sends a clear message that the FBR is committed to maintaining the integrity of tax enforcement processes and will not tolerate interference in the execution of statutory duties.
The penalties outlined in Section 196 underline the seriousness with which the FBR views any form of obstruction. Whether through fines, imprisonment, or a combination of both, the consequences upon conviction are designed to act as a powerful deterrent, discouraging individuals from interfering with the lawful actions of income tax authorities.
This amendment aligns with international best practices where authorities are protected from interference to ensure the smooth and effective execution of their duties. It recognizes the critical role played by income tax authorities in upholding the integrity of the tax system and reinforces their ability to carry out their functions without undue hindrance.
Industry experts have welcomed this move, noting that it addresses a potential vulnerability in tax enforcement. By explicitly penalizing the obstruction of income tax authorities, the FBR is taking proactive measures to safeguard the efficacy of tax administration and foster an environment of compliance.
The amendment to Section 196 of the Income Tax Ordinance, 2001, fortifying punishments for obstructing income tax authorities, underscores the commitment of the FBR to safeguard the integrity of tax enforcement processes. This change is anticipated to act as a significant deterrent against any attempts to interfere with the lawful actions of income tax authorities, contributing to a more robust and effective tax administration system in Pakistan.