Karachi, June 11, 2025 – In a significant move to enhance enforcement and ensure timely collection of dues, the Finance Bill 2025 has proposed amendments to the Income Tax Ordinance, 2001, empowering tax authorities to initiate immediate recovery of outstanding tax liabilities.
(more…)Tag: tax recovery
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Lahore High Court issues landmark ruling on tax recovery
Lahore, June 1, 2025 – The Lahore High Court has issued a detailed judgment clarifying the legal process regarding the recovery of tax arrears and the initiation of criminal proceedings against taxpayers.
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FBR Tightens Procedures for Tax Recovery from Bank Accounts
Karachi, February 19, 2024 – The Federal Board of Revenue (FBR) has tightened its grip on tax recovery procedures, mandating that its offices obtain prior approval for accessing taxpayers’ bank accounts.
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FBR Recovers Rs 4.5 Billion in Tax From Multinational Company
Karachi, January 2, 2024 – The Federal Board of Revenue (FBR) has successfully recovered an outstanding tax amount of Rs 4.5 billion from a multinational company (MNC).
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Law prohibits arrest of women, minors for tax recovery
ISLAMABAD: Income tax law has prohibited tax officials from arresting any woman or a minor for recovery of tax default amount, officials at Federal Board of Revenue (FBR) said on Monday.
They said that Commissioner Inland Revenue, having authority to recover tax amount by using various options defined under the law, has been prohibited to order the arrest of a woman or any person who, in his opinion, is a minor or of unsound mind.
The officials said that Income Tax Rules, 2002 has explained in detailed about the powers of Commissioner of Inland Revenue related to recovery of outstanding tax money.
The commissioner has an authority to ask officer incharge of the civil person for detention of the defaulter in civil prison under Rule 186(1) of the Income Tax Rules, 2002.
Rule 187 explains detention in and release from prison.-
(1) Every person detained in the civil prison in execution of a notice may be so detained-
(a) where the notice is for a demand of an amount exceeding twenty five thousands, for a period of six months, and
(b) in any other case for a period of six weeks:
Provided that he shall be released from such detention-
(i) on the amount mentioned in the warrant for his detention being paid to the Officer-in-charge of the civil prison, or
(ii) on the request of the Commissioner who has issued the notice or of the Commissioner on any ground other than the grounds mentioned in rules 193(1) and 196:
Provided further that where he is to be released on the request of the Commissioner, he shall not be released without the order of the Commissioner.
(2) A defaulter released from detention under this rule shall not, merely by reason of his release, be discharged from his liability for the arrears; but he shall liable to be re-arrested under the notice in execution of which he was detained in the civil prison.
Rule 188. Release.-
(1) The Commissioner may order the release of a defaulter who has been arrested in execution of a notice upon being satisfied that he has disclosed the whole of his property and has placed it at the disposal of Commissioner and that he has not committed any act in bad faith.
(2) If the Commissioner has ground for believing the disclosure made by the defaulter under sub-rule (1) to have been untrue, he may order the re-arrest of the defaulter in execution of the notice but the period of his detention in the prison shall not in the aggregate exceed that authorized by rule 187.
Rule 189. Release on ground of illness.-
(1) At any time after a warrant for the arrest of a defaulter has been issued, the Commissioner may cancel it on ground of the serious illness of the defaulter.
(2) Where a defaulter has been arrested, the Commissioner may release him if, in the opinion of the Commissioner of Tax, he is not in a fit state of mind to be detained in the civil prison.
(3) Where a defaulter has been committed to the civil prison, he may be, released therefrom by the Commissioner on the ground of the existence of any infectious or contagious disease or on the ground of his suffering from any illness.
(4) A defaulter released under this rule may be re-arrested, but the period of his detention in the civil prison shall not in the aggregate exceed that authorized by rule 164.
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PRA empowered to arrest tax defaulters, imprison for six months
LAHORE: Punjab Revenue Authority (PRA) has been empowered to arrest defaulters and imprison for six months for making recovery of outstanding tax.
The Punjab Finance Bill, 2020 has proposed to empower PRA in certain provisions of Punjab Sales Tax Act, 2012 for making recovery of outstanding tax.
According to interpretation of Punjab Finance Bill, 2020 by PwC A. F. Ferguson, the bill proposes to empower tax authorities whereby they may also require a financial institution or banking company to make payment of tax due from a registered person out of running and demand finance extended to the registered person.
By way of insertion of clause (g) to section 70 of the Act, it also empowers the department to arrest a defaulter and imprison him for not more than six months where a tax demand has been upheld by the Appellate Tribunal.
No action is presently taken where a person deposits at least 25 percent of the tax demand during pendency of an appeal. It is proposed to reduce this limit to 10 percent of the tax demand. This is a positive amendment.
The amendments relating to administrative and procedural matters are summarized as under:
— The power of the PRA to de-register a person is proposed to be devolved to the Commissioner.
— The PRA is being authorized to specify format of invoices to be issued by a registered person or class of registered persons and to prescribe a procedure for authentication of such invoices.
— The PRA or authorized officer may require any registered person or class of registered persons to issue invoices electronically and transmit such invoices to PRA in the prescribed manner.
— To streamline audit proceedings, it is proposed to empower officers to conduct audit proceedings electronically through video links or any other facility as may be notified by PRA.
— It is proposed to empower even officers, below the rank of an Assistant Commissioner, to call for information or documents regarding any enquiry or audit.
Earlier, only an Assistant Commissioners or Officers with higher ranks may call for such information.
— To facilitate taxpayers, it is proposed that appeal before the Commissioner (Appeals) may also be filed through electronically.
— The period of filing an appeal before the appellate tribunal is proposed to enhance from 30 days to 60 days.
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FBR notifies rules for third party recovery of defaulted amount
ISLAMABAD: Federal Board of Revenue (FBR) on Friday notified rules for third-party recovery of defaulted amount.
The FBR issued SRO 274(I)/2020 dated April 02, 2020 to implement the draft rules released on February 14, 2020 through SRO 111(I)/2020.
Through the SRO the FBR amended the Income Tax Rules, 2002 and introduced a new chapter “Recovery of Tax From Persons Holding Money on Behalf of a Taxpayer.”
As per the rules the tax authorities have be empowered to recover tax from a defaulter through third party, who owes money to the defaulted taxpayer.
The FBR is facing huge revenue shortfall for achieving this revenue collection target. Therefore, the tax machinery may apply all possible ways to recovery outstanding amount.
The Section 140 explains the procedure of recovery through third party.
Section 140: Recovery of tax from persons holding money on behalf of a taxpayer
Sub-Section (1): For the purpose of recovering any tax due by a taxpayer, the Commissioner may, by notice, in writing, require any person –
(a) owing or who may owe money to the taxpayer; or
(b) holding or who may hold money for, or on account of the taxpayer;
(c) holding or who may hold money on account of some other person for payment to the taxpayer; or
(d) having authority of some other person to pay money to the taxpayer, to pay to the Commissioner so much of the money as set out in the notice by the date set out in the notice:
“Provided that the Commissioner shall not issue notice under this sub-section for recovery of any tax due from a taxpayer if the said taxpayer has filed an appeal under section 127 in respect of the order under which the tax sought to be recovered has become payable and the appeal has not been decided by the Commissioner (Appeals), subject to the condition that ten per cent of the said amount of tax due has been paid by the taxpayer.”
Sub-Section (2): Subject to sub-section (3), the amount set out in a notice under sub-section (1) —
(a) where the amount of the money is equal to or less than the amount of tax due by the taxpayer, shall not exceed the amount of the money; or
(b) in any other case, shall be so much of the money as is sufficient to pay the amount of tax due by the taxpayer.
Sub-Section (3): Where a person is liable to make a series of payments (such as salary) to a taxpayer, a notice under sub-section (1) may specify an amount to be paid out of each payment until the amount of tax due by the taxpayer has been paid.
Sub-Section (4): The date for payment specified in a notice under sub-section (1) shall not be a date before the money becomes payable to the taxpayer or held on the taxpayer’s behalf.
Sub-Section (5): The provisions of sections 160, 161, 162 and 163, so far as may be, shall apply to an amount due under this section as if the amount were required to be deducted from a payment under Division III of Part V of this Chapter.
Sub-Section (6): Any person who has paid any amount in compliance with a notice under sub-section (1) shall be treated as having paid such amount under the authority of the taxpayer and the receipt of the Commissioner constitutes a good and sufficient discharge of the liability of such person to the taxpayer to the extent of the amount referred to in such receipt.
Sub-Section (10): In this section, “person” includes any Court, Tribunal or any other authority.
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FBR may invoke provisions for third party recovery
ISLAMABAD: Federal Board of Revenue (FBR) may invoke provisions related to third party recovery of tax defaulted by a taxpayer.
FBR sources said that the tax authorities may invoke Section 140 of Income Tax Ordinance, 2001 in order to make recovery from a defaulter.
The FBR recently notified draft rules through SRO 111(I)/2020 dated February 14, 2020 to implement Section 140 of the Ordinance.
As per the draft rules the tax authorities would be empowered to recover tax from a defaulter through third party, who owes money to the defaulted taxpayer.
The sources said that the FBR soon issue the notification to make draft rules to part of the statute.
The FBR is facing huge revenue shortfall for achieving this revenue collection target. Therefore, the tax machinery may apply all possible ways to recovery outstanding amount.
The Section 140 explains the procedure of recovery through third party.
Section 140: Recovery of tax from persons holding money on behalf of a taxpayer
Sub-Section (1): For the purpose of recovering any tax due by a taxpayer, the Commissioner may, by notice, in writing, require any person –
(a) owing or who may owe money to the taxpayer; or
(b) holding or who may hold money for, or on account of the taxpayer;
(c) holding or who may hold money on account of some other person for payment to the taxpayer; or
(d) having authority of some other person to pay money to the taxpayer, to pay to the Commissioner so much of the money as set out in the notice by the date set out in the notice:
“Provided that the Commissioner shall not issue notice under this sub-section for recovery of any tax due from a taxpayer if the said taxpayer has filed an appeal under section 127 in respect of the order under which the tax sought to be recovered has become payable and the appeal has not been decided by the Commissioner (Appeals), subject to the condition that ten per cent of the said amount of tax due has been paid by the taxpayer.”
Sub-Section (2): Subject to sub-section (3), the amount set out in a notice under sub-section (1) —
(a) where the amount of the money is equal to or less than the amount of tax due by the taxpayer, shall not exceed the amount of the money; or
(b) in any other case, shall be so much of the money as is sufficient to pay the amount of tax due by the taxpayer.
Sub-Section (3): Where a person is liable to make a series of payments (such as salary) to a taxpayer, a notice under sub-section (1) may specify an amount to be paid out of each payment until the amount of tax due by the taxpayer has been paid.
Sub-Section (4): The date for payment specified in a notice under sub-section (1) shall not be a date before the money becomes payable to the taxpayer or held on the taxpayer’s behalf.
Sub-Section (5): The provisions of sections 160, 161, 162 and 163, so far as may be, shall apply to an amount due under this section as if the amount were required to be deducted from a payment under Division III of Part V of this Chapter.
Sub-Section (6): Any person who has paid any amount in compliance with a notice under sub-section (1) shall be treated as having paid such amount under the authority of the taxpayer and the receipt of the Commissioner constitutes a good and sufficient discharge of the liability of such person to the taxpayer to the extent of the amount referred to in such receipt.
Sub-Section (10): In this section, “person” includes any Court, Tribunal or any other authority.
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FBR drafts rules to make recovery
ISLAMABAD: Federal Board of Revenue (FBR) on Monday issued draft rules for making recovery from persons holding money on behalf of taxpayers.
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IR officers empowered to sell defaulters’ properties without attachment
KARACHI: Officers of Inland Revenue (IR) have been empowered to sell moveable or immovable properties of sales tax defaulters for recovery of arrears.
Section 48 of Sales Tax Act, 1990, which was updated up to June 30, 2019 by the Federal Board of Revenue (FBR) explained the powers of IR officers for recovery of arrears of tax.
Section 48: Recovery of arrears of tax
Where any amount of tax is due from any person, the officer of Inland Revenue may:-
(a) deduct the amount from any money owing to person from whom such amount is recoverable and which may be at the disposal or in the control of such officer or any officer of Income Tax, Customs or Central Excise Department;
(b) require by a notice in writing any person who holds or may subsequently hold any money for or on account of the person from whom tax may be recoverable to pay to such officer the amount specified in the notice;
(a) stop removal of any goods from the business premises of such person till such time the amount of tax is paid or recovered in full;
(ca) require by a notice in writing any person to stop clearance of imported goods or manufactured goods or attach bank accounts;
(b) seal the business premises till such time the amount of tax is paid or- recovered in full;
(c) attach and sell or sell without attachment any movable or immovable property of the registered person from whom tax is due; and
(f) recover such amount by attachment and sale of any moveable or- immovable property of the guarantor, person, company, bank or financial institution, where a guarantor or any other person, company, bank or financial institution fails to make payment under such guarantee, bond or instrument:
Provided that the Commissioner Inland Revenue or any officer of Inland Revenue shall not issue notice under this section or the rules made thereunder for recovery of any tax due from a taxpayer if the said taxpayer has filed an appeal under section 45B in respect of the order under which the tax sought to be recovered has become payable and the appeal has not been decided by the Commissioner (Appeals), subject to the condition that ten per cent of the amount of tax due has been paid by the taxpayer.
(1A) If any arrears of tax, default surcharge, penalty or any other amount which is adjudged or payable by any person and which cannot be recovered in the manner prescribed above, the Board or any officer authorized by the Board, may, write off the arrears in the manner as may be prescribed by the Board.
(2) For the purpose of recovery of tax, penalty or any other demand raised under this Act, the officer of Inland Revenue shall have the same powers which under the Code of Civil Procedure 1908 (V of 1908), a Civil Court has for the purpose of recovery of an amount due under a decree.