Islamabad: Amendments introduced in the Finance Bill, 2025, aimed at altering the legal framework for tax fraud arrests, have sparked discussion in the National Assembly and among business circles. The proposed changes have raised concerns about public understanding and the potential for misuse of power.

The amendments seek to modify Section 37A of the Sales Tax Act, 1990, which already outlines procedures for arresting individuals involved in tax fraud. Under the new proposal, the arresting powers of officers are curtailed, requiring a prior inquiry and approval from the Commissioner Inland Revenue (CIR) before any arrest can be made. This change requires an investigation to substantiate the belief that tax fraud has occurred, shifting the arrest authority away from the Assistant CIR.

A notable addition is a provision for referring cases of mala fide arrests to the Chief Commissioner for further inquiry, adding a layer of oversight. The amendments aim to enhance transparency and due process, addressing previous concerns over arbitrary arrests.

FBR Chairman Rashid Mahmood Langrial has indicated openness to refining these amendments, suggesting potential revisions such as involving multiple senior officers in the arrest approval process. This comes amid efforts to reassure compliant taxpayers that evaders will be dealt with firmly.

To address concerns of potential abuse, Prime Minister Shehbaz Sharif has established a high-powered committee led by the Minister for Finance and Revenue. This committee, comprising various ministers and the FBR Chairman, is tasked with reviewing the amendments and suggesting safeguards to prevent misuse. Recommendations are expected within three days.

The Federal Board of Revenue (FBR) emphasizes its commitment to protecting the rights of compliant taxpayers while enhancing tax collection and discouraging non-compliance.