Tax Talks

Categories Targeted by FBR

FBR has primarily issued notices to three groups:

1. Return filers with no declared income: Taxpayers who filed returns but showed no income for 2024.
2. Underreported income or tax: Tax department has definite information that the taxpayer owns more than they have reported e.g more than three vehicles, property owner, paying tuition fees to private institutes.
3. Non-filers: Individuals or entities who failed to file tax returns.

Powers of FBR in Case of Non-Compliance

1. Property Seizure
   

   FBR can attach both movable (vehicles, jewelry, etc.) and immovable (real estate) properties.
   Ownership rights are revoked, and the assets are forfeited to FBR for recovery purposes.

2. Bank Account Freezing
   

   FBR can freeze the taxpayer’s bank accounts, rendering them inaccessible for transactions.

3. Business Takeover
   

   In the case of businesses, FBR may establish a management committee to seize and manage the operations.

4. Imprisonment
   

   Non-compliance can result in imprisonment for up to six months, especially in cases of deliberate evasion.

5. Mandatory Payments for Appeals
   

   To file an appeal at the High Court, taxpayers are required to deposit 30% of the disputed tax amount as a precondition. This deposit is non-refundable but adjustable against future tax liabilities.

Legal Path for Tax Disputes

If a taxpayer contests the notice:

1. Appeal to Commissioner of Appeals
   

   The initial appeal lies with the Commissioner of Appeals, typically within FBR.
   Decisions often uphold the original order.

2. Appeal to the Appellate Tribunal (ATR)
   

   Taxpayers can escalate the matter to ATR if dissatisfied with the Commissioner’s decision.
   ATR decisions are final unless challenged in the High Court.

3. High Court Appeal
   

   High Court intervention requires a 30% deposit of the disputed tax.
   If this deposit is unpaid, the court will not grant a stay or hear the case.

Impact of FBR’s Recent Measures

• The FBR’s action plan includes issuing 5,000 notices, which may lead to mass enforcement.
• This approach is viewed as a method to meet tax collection targets but has raised concerns about misuse of authority.

Key Takeaways for Taxpayers

• Stay Proactive: File returns accurately and on time to avoid penalties.
• Maintain Records: Keep detailed records of financial transactions to substantiate your income and taxes.
• Seek Legal Advice: Engage a tax consultant or lawyer to navigate appeals effectively.
• Respond Promptly: Meet deadlines for payments or appeals to prevent escalation of penalties.

By understanding the gravity of non-compliance and the available remedies, taxpayers can better protect their assets and avoid unnecessary legal complications.