The Federal Board of Revenue (FBR) in Pakistan has recently made a positive move to ease recoveries for taxpayers until the first appeal is filed. In the past, officers of Inland Revenue had the power to freeze the bank accounts of defaulters, but this practice has been halted by the FBR since 2019. This article aims to discuss this new development and its implications for taxpayers in Pakistan.
Until now, the FBR had granted its officers the power to take coercive actions against defaulters, which included attaching their bank accounts. However, with the withdrawal of this power, any coercive actions taken by FBR officers prior to sending notices and allowing time for the preparation of appeals and defense cases are now unlawful.
To avoid any technical lacunas, the FBR has clarified that all procedural requirements must be followed during the proceedings of a case. This ensures that taxpayers are given the stipulated time of thirty days before starting recovery proceedings. This move is aimed at reducing the number of appeals to higher authorities, which often result in stay orders being granted to the aggrieved party, thus prolonging the legal proceedings.
The FBR’s decision to ease recoveries for taxpayers is a positive step towards ensuring that taxpayers are given ample time to prepare their appeals and respond to cases against them. This move is expected to encourage taxpayers to pay their taxes willingly and timely, without the fear of being subjected to coercive actions.
However, it is important to note that this decision should not be taken as a license to default on taxes. Taxpayers are still required to fulfill their tax obligations in a timely manner, failing which the FBR may take coercive action against them. The FBR has emphasized that good judgment must be exercised by its officials, particularly the zonal commissioner, when filing references and civil appeals. They should only propose references and appeals where substantial revenue or critical legal implementation is required. The cost and benefit effect of litigation should be thoroughly evaluated before plunging into it.
In conclusion, the FBR’s decision to ease recoveries for taxpayers until the first appeal is filed is a positive move towards encouraging taxpayers to fulfill their tax obligations willingly and timely. It is important to note that this decision should not be taken as a license to default on taxes, and taxpayers are still required to fulfill their tax obligations in a timely manner. The FBR’s officials should exercise good judgment when filing references and appeals, only proposing them where substantial revenue or critical legal implementation is required, and thoroughly evaluating the cost and benefit effect of litigation before proceeding.