Karachi, June 14, 2025 – In a major policy shift, the Federal Board of Revenue (FBR) has proposed that cases involving sales tax fraud will now be adjudicated by special judges, rather than by FBR officers.
This reform is part of broader legal and administrative changes outlined in the Finance Bill 2025, aimed at strengthening accountability and transparency in tax enforcement.
According to the FBR, the decision to transfer the authority from FBR officers to judicial officers in fraud-related cases is intended to ensure due process and impartiality. “Tax fraud will be prosecuted before special judges based on the results of departmental inquiry and investigation. The final decision shall rest with the judiciary, not departmental officers,” the FBR noted in the summary of the Finance Bill’s salient features.
This move is a part of the government’s ongoing strategy to combat tax evasion and fraud more effectively. The FBR emphasized that it is enhancing enforcement frameworks, introducing stricter penalties, and streamlining legal provisions to deter fraudulent practices. One major enhancement is the introduction of legal recognition for “abettors”—individuals who knowingly assist or collaborate with taxpayers in committing fraud. Under the proposed amendments, the term “abettor” will be clearly defined, and punishments for such collaboration will be explicitly prescribed.
Furthermore, the definition of tax fraud, as per Clause (37) of Section 2 of the Sales Tax Act, 1990, will be broadened. The expanded scope will now include modern forms of fraud, such as those involving digital or technological manipulation. This update reflects the changing nature of tax crimes in an increasingly digital economy.
In addition, a distinction will be made in law between ordinary non-compliance and deliberate tax fraud, enabling more targeted and appropriate legal actions. Penalty provisions will also be revised, with harsher consequences for fraudulent behavior, while more lenient approaches may be applied to cases of simple non-compliance.
Through these legal reforms, the FBR aims to strengthen its ability to prosecute tax fraud, enhance judicial fairness, and restore confidence in the tax administration system.