FBR’s arrest authority restricted to tax fraud over Rs50m

ISLAMABAD: The National Assembly’s Standing Committee on Finance was briefed on Tuesday that Federal Board of Revenue (FBR) has been barred from arresting individuals involved in tax fraud under Rs50 million.

The committee — met under the chair of Syed Naveed Qamar — also unanimously rejected the proposal to impose an 18% sales tax on solar panels.

FBR Chairman Rashid Mehmood Langrial briefed the committee on proposed amendments to Section 37-A of the Finance Bill 2025.

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He said that after the discussion on these amendments in the Senate committee, a special committee was formed under the chairmanship of Finance Minister Muhammad Aurangzeb on the directions of the Prime Minister Shehbaz Sharif.

He said that in light of the recommendations forwarded by this committee, the definition of tax fraud has been divided into two parts, and now only those individuals will be arrested who are at clear risk of absconding or who are involved in record tampering and who have been sent notices three times.

According to Langrial, in the light of the recommendations forwarded by this committee, a new draft has been prepared, defining tax fraud in two categories. Arrests will only be made in cases where the accused is at risk of fleeing, has tampered with records, and has already received three noticesm, he added.

Regarding the FBR’s authority to arrest tax evaders, Langrial said that arrests can only be approved by a three-member FBR board committee.

Importantly, he added, no arrest will be made for tax frauds involving less than Rs50 million.

On the other hand, the committee roundly rejected the proposal to impose an 18% general sales tax on solar panels. The members said the move would hurt consumers seeking relief from expensive electricity.

The same stance echoed during the Senate Standing Committee on Finance and Revenue meeting, rejecting the 18% GST proposal.

Senate Committee for increasing tax rate for FATA, PATA

Meanwhile, the Senate Finance Committee, chaired by Senator Saleem Mandviwalla, reviewed tax exemptions in federally and provincially administered tribal areas (FATA and PATA).

The finance minister briefed that a committee formed to review tax relief for FATA and PATA under the headship of Rana Sanaullah had recommended imposing a 10% sales tax in those regions, following input from business chambers that reported misuse of the current exemptions.

Some senators including Senator Mohsin Aziz and Senator Abdul Qadir recommended increasing the tax rate to 12% and 18%, respectively. FBR Chairman Langrial supported the idea, saying it would help generate significant revenue.

Senators criticised hoarding by businesses ahead of the tax announcement and vowed to remove the proposal from the Finance Bill altogether.