ISLAMABAD: Under the amended Finance Bill 2025–26, the Federal Board of Revenue (FBR) must now form a three-member committee before issuing arrest warrants in high-level tax fraud cases.
This change applies specifically when the suspected tax loss exceeds Rs. 50 million.
The goal is to ensure transparency and due process in financial crime investigations.
Revised Legal Procedure for FBR Investigations
The updated Section 37A of the Sales Tax Act, 1990 establishes a strict protocol for initiating arrests.
Authorities can only proceed with arrest if the accused fails to respond to three separate notices, tries to escape, or is believed to be tampering with evidence.
The FBR committee is responsible for reviewing the case and may then permit the Commissioner to issue the arrest warrant.
The new rules also allow for the arrest of directors or company officers held personally accountable for tax fraud.
However, this does not release the company from its financial responsibilities.
Compounding and Due Process Measures
The amended law introduces a provision for compounding of offences.
This means an accused individual can settle the case at any stage by paying the full tax, surcharge, and penalty.
Moreover, the process of arrest must comply with legal standards.
Accused persons must be informed in writing of the reasons for their arrest.
All actions must follow the procedures outlined in the Code of Criminal Procedure, 1898.
