Pakistan Aims to Streamline Tax Recovery Process with Uniform Rules

Pakistan’s Federal Board of Revenue (FBR) is working towards harmonizing tax recovery procedures for income tax, sales tax, and federal excise duty. This initiative aims to create a more consistent and efficient system for collecting tax dues.

Current Situation:

  • Different recovery procedures exist for each tax type, leading to potential confusion and inconsistencies.
  • The Income Tax Ordinance offers taxpayers a 7-day grace period after a demand notice before recovery action begins (if no restraining order exists).
  • Sales Tax and Federal Excise Duty lack a similar provision, but the FBR instructs field offices to provide a 7-day window before starting recovery after an appellate forum confirms an order.

Proposed Changes:

  • The FBR plans to issue uniform recovery rules as part of the 2024-25 budget to streamline the process across all three tax categories.
  • This could potentially include a standardized 7-day grace period for all tax types before recovery action commences.

FBR’s Stance on Legal Compliance:

  • The FBR emphasizes adherence to court orders and directives from judicial authorities.
  • They confirm that tax recovery will not be pursued if a restraining order exists.
  • The aim is to ensure taxpayers have adequate time to seek legal recourse.

Commissioner of Inland Revenue (Appeals):

  • The article clarifies that while the Commissioner falls under the FBR’s administrative structure, the legislature grants them judicial independence.

Overall, this move by the FBR indicates a commitment to creating a fairer and more transparent tax collection system in Pakistan.

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