Islamabad, June 22, 2025 — The Senate of Pakistan has formally submitted a set of recommendations to the National Assembly, seeking crucial amendments to the arrest powers of Federal Board of Revenue (FBR) officers under the proposed Finance Bill, 2025.
These recommendations come as part of the Senate’s constitutional role in reviewing money bills and offering advisory input on legislative measures affecting the public and fiscal governance.
The Senate specifically focused on changes proposed to Section 37A of the Sales Tax Act, 1990, which grants expanded powers to FBR’s Inland Revenue officers in cases of suspected tax fraud. The recommendations aim to ensure greater checks and balances in the exercise of these powers, ensuring due process and protection of individual rights.
According to the proposed text, Inland Revenue officers not below the rank of Assistant Commissioner, or those authorized by the Board, may initiate inquiries based on credible material evidence of tax fraud. However, such inquiries can only begin with prior approval from the Commissioner. These officers will have the powers equivalent to a civil court for summoning witnesses, recording statements under oath, and requiring document production.
The Senate emphasized the need for accountability throughout the process. The inquiry officer must confront the accused with details of alleged fraud and provide an opportunity for defense. The inquiry must be concluded within six months and be followed by a report to the Commissioner for either further investigation or closure.
Furthermore, the Commissioner may authorize an investigation only upon written justification. Arrest powers during the investigation phase may only be exercised upon satisfying strict conditions: repeated failure to appear despite three notices, attempts to abscond, or risks of evidence tampering. Arrest warrants must be obtained from a Special Judge or, in certain high-value fraud cases, may be issued through a three-member FBR committee with the Chairman’s notification.
Importantly, the Senate recommended that all arrests must comply with the Code of Criminal Procedure, and the accused must be informed in writing of the grounds for arrest at the time of detention. The option to compound offences remains, provided the accused pays the evaded tax with penalties and surcharges.
These recommendations reflect the Senate’s commitment to ensuring that FBR’s enforcement powers are balanced, transparent, and aligned with legal safeguards.