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Definition of ‘Tax fraud' & procedure for ‘arrest': There will be no amendment in Act: MoS

Definition of ‘Tax fraud' & procedure for ‘arrest': There will be no amendment in Act: MoS

ISLAMABAD: Minister of State for Finance, Bilal Azhar Kayani Thursday said the government will not amend Finance Act 2025 to further change definition of tax fraud or procedure for arrest, but the Federal Board of Revenue (FBR) will issue sales tax explanatory circular to address all concerns of the business community.
Kayani informed Senate Standing Committee on Finance on Thursday that the prime minister has strictly directed the FBR not to harass the taxpayers, particularly, business and trade. After detailed meetings with the federation and chambers, the government has started internal homework to resolve these issues. 'I will not share specific details as we are in IMF programme. However, all concerns of the business community will be addressed', he said.
We have given assurance to the business community that it is our responsibility that the law should not be misused by the tax officials. There is a misunderstanding that law of arrest of tax evaders is a new law, he maintained.
Finance Act expands definition of tax fraud
Presidents of chambers of commerce and industries are well aware of the developments. A committee has also been formed to resolve issues in 30 days' period, he said.
President Karachi Chamber of Commerce and Industry (KCCI) Muhammad Jawed Bilwani requested the committee to abolish clause 9 of the Section 37A (power to inquire, investigate offences warranting prosecution under this Act and arrest of a person). The arrest of taxpayer on the basis of 'suspicion' has also been challenged by Bilwani.
However, committee members insisted that ample safeguards have been placed to check any misuse of the powers of the tax officials. In case of 'suspicion', there should be definite information of tax fraud for arresting the accused person, they said.
Minister of State for Finance stated that there is some kind of misunderstanding between the FBR and business community. The government has placed additional safeguards in Finance Act 2025 to ensure that arrest powers should not be misused.
Earlier, arrests were made by officials of the level of Additional Commissioners and now a committee comprising of senior FBR Members will give approval of the arrests.
Bilal Azhar Kayani stated that it has also been decided to convene monthly meeting with the business community to review impact of the law on the businessmen.
FBR Member (Inland Revenue - Operations) Dr Hamid Ateeq Sarwar said that Finance Act 2025 should not be amended at this early stage of promulgation. We should not create any embarrassment for the Parliament and it would not be appropriate to suddenly change the sales tax law after promulgation of the Finance Act 2025.
He said that the purpose of the law is to take action against those involved in fraudulent business of fake/flying invoices. In 2024-25, the FBR prevented revenue loss of Rs837 billion on account of fake invoices. In 2023-24, tax fraud of Rs1,373 billion was prevented.
The FBR Member said that the FBR has addressed all concerns of the business community through a sales tax circular. The FBR will clarify that arrest would not be made without clear evidence against the taxpayer. This issue will also be clarified through the circular. The FBR has also consisted Grievance Redressal Committee to address issues of the business community. If any tax officer has made a wrong case against the taxpayer, he would be punished.
He dispelled impression that the FBR do not take action against the corrupt tax officials. 'You just simply go through the FBR website (Admin Wing-HRMS), the numbers of tax officials penalized has been made public.'
The FBR Member said that both the Senate and National Assembly Standing Committees on Finance read clause by clause the entire Finance Bill and also proposed comprehensive changes in the sales tax law. Due to limited time, there were apprehensions that the anomy committee has not serious considered the issues of stakeholders.
The business community has not been targeted in any way through Finance Act 2025. The responsibility to prove tax fraud has now been placed on the FBR, he said.
Let the law come into effect as significant improvement in the law has been made to facilitate the business community, the FBR Member added.
Chairman of the Finance committee said that the government has no intention to victimise business community. If the FBR's clarification is acceptable to business community then the law should remain in force for 2025-26. There is no need to amend Finance Act 2025 in case all issues are addressed by the FBR. Representative of the Faisalabad chamber of commerce and industry observed that we are not afraid of the law of arrest but we are concerned about the blackmailing by the tax officers in the field formations.
Copyright Business Recorder, 2025
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