In a bid to strengthen the protection of sensitive taxpayer information and maintain the integrity of the tax system, the Federal Board of Revenue (FBR) has introduced stringent provisions under Section 198 of the Income Tax Ordinance, 2001.
This section, as updated up to June 30, 2021, and amended through the Finance Act, 2021, outlines the prosecution for unauthorized disclosure of information by a public servant.
Text of Section 198 – Prosecution for Unauthorized Disclosure:
Section 198 of the Income Tax Ordinance, 2001, reads as follows:
198. Prosecution for unauthorized disclosure of information by a public servant. A person who discloses any particulars in contravention of sub-section 1B of section 107 or section 216 shall commit an offence punishable on conviction with a fine of not less than five hundred thousand rupees or imprisonment for a term not exceeding one year, or both.
(1) Protection of Taxpayer Information: The primary objective of Section 198 is to safeguard the confidentiality of taxpayer information. Public servants, entrusted with access to sensitive data, are explicitly prohibited from disclosing any particulars in violation of specified sections, namely sub-section 1B of section 107 or section 216.
(2) Stringent Penalties: The provision underscores the gravity of unauthorized disclosure by imposing strict penalties. Any person found guilty of such an offense can be subject to a substantial fine of not less than five hundred thousand rupees. Additionally, imprisonment for a term not exceeding one year is a possible consequence, emphasizing the seriousness with which the authorities view breaches of confidentiality.
(3) Legal Framework: The inclusion of Section 198 in the Income Tax Ordinance, 2001 aligns with international best practices and standards for protecting taxpayer information. The legal framework aims to create a robust and secure environment, assuring taxpayers that their financial details and other sensitive information are treated with the utmost confidentiality.
(4) Deterrent Effect: By introducing stringent penalties for unauthorized disclosure, the FBR aims to create a deterrent effect. Public servants, who play a crucial role in the administration of tax laws, are now acutely aware of the legal consequences associated with divulging confidential information. This measure is likely to enhance compliance and bolster public trust in the tax administration system.
(5) Compliance and Accountability: The amended provision reinforces the importance of compliance and accountability within the public service sector. Public servants are reminded of their ethical and legal obligations to maintain the confidentiality of taxpayer information, instilling a sense of responsibility in handling sensitive data.
Section 198 of the Income Tax Ordinance, 2001, represents a decisive step by the FBR to fortify the protection of taxpayer information. The stringent penalties outlined in the provision send a clear message about the zero-tolerance approach towards unauthorized disclosure. As the tax landscape evolves, ensuring the security and confidentiality of taxpayer information remains paramount, and these legal measures underscore the commitment to upholding the highest standards of integrity within the tax administration system. Public servants are urged to familiarize themselves with the amended provisions and act responsibly to maintain the trust and confidence of the taxpayers they serve.
