Further to KQU 3354 evening of 3.5.25 being an important matter, we would inform you about Tax Laws (Amendment) Ordinance, 2025 (Attachment 3107.1) effective from 2.5.25. The amendments are for quick recovery which may lead to Corporate Emergency for CFO, Tax & Legal Heads. Hence, we will arrange Seminar shortly. Key changes include the following:
1. Income tax authorities are empowered to demand immediate payment of tax dues if the underlying legal issue has been decided by a High Court or the Supreme Court of Pakistan. This applies even if the taxpayer’s own case is pending, a stay is in effect, or a contrary decision exists from a lower forum. The provision overrides all other laws, rules, or judgments and allows recovery within a specified timeframe, strengthening enforcement but raising concerns over fairness and finality in litigation.
2. Moreover, tax authorities are authorized to immediately recover tax payable under any assessment order if the legal issue involved has been decided by a High Court or the Supreme Court of Pakistan. This provision overrides all other laws, rules, or court decisions and allows recovery within the timeframe specified in the notice, regardless of any relief or stay granted by lower forums. It strengthens enforcement powers but may affect taxpayer rights in pending or disputed cases.
3. FBR or Chief Commissioner is allowed to post Inland Revenue officers at any business premises to monitor production, supply of goods, services provided, and unsold stock, subject to conditions they may set. It aims to enhance real-time oversight and ensure tax compliance.
B. SPECIFIC TRACK VERSION
1. Recovery of tax out of property and through arrest of taxpayer - Section 138 New (3A)
138. Recovery of tax out of property and through arrest of taxpayer.— (1) For the purpose of recovering any tax due by a taxpayer, the Commissioner may serve upon the taxpayer a notice in the prescribed form requiring him to pay the said amount within such time as may be specified in the notice.
(2) If the amount referred to in the notice issued under sub-section (1) is not paid within the time specified therein or within the further time, if any, allowed by the Commissioner, the Commissioner may proceed to recover from the taxpayer the said amount by one or more of the following modes, namely:—
(a) attachment and sale of any movable or immovable property of the taxpayer;
(b) appointment of a receiver for the management of the movable or immovable property of the taxpayer;
(c) arrest of the taxpayer and his detention in prison for a period not exceeding six months and
(d) as specified under clauses (a), (ca) and (d) of sub-section (I) of section 48 of the Sales Tax Act, 1990.
(3) For the purposes of recovery of tax under sub-section (2), the Commissioner shall have the same powers as a Civil Court has under the Code of Civil Procedure, 1908 (Act V of 1908), for the purposes of the recovery of any amount due under a decree.
(3A) Notwithstanding anything contained in this Ordinance or any other law or any rule, any decision or judgment of any court, forum or authority, the tax payable under any provision of this Ordinance or any assessment order shall become immediately payable or within the time specified in the notice issued by the income tax authority under this sub-section, irrespective of the time provided under any other provision or the said decision or judgment, in case the issue giving rise to the tax payable is decided by a High Court or Supreme Court of Pakistan.
(4) The Board may make rules regulating the procedure for the recovery of tax under this section and any other matter connected with, or incidental to, the operation of this section.
2. Recovery of tax from persons holding money on behalf of a taxpayer - Section 140 New (6A)
140. Recovery of tax from persons holding money on behalf of a taxpayer.— (1) For the purpose of recovering any tax due by a taxpayer, the Commissioner may, by notice, in writing, require any person –
(a) owing or who may owe money to the taxpayer; or
(b) holding or who may hold money for, or on account of the taxpayer;
(c) holding or who may hold money on account of some other person for payment to the taxpayer; or
(d) having authority of some other person to pay money to the taxpayer
to pay to the Commissioner so much of the money as set out in the notice by the date set out in the notice
Provided that the Commissioner shall not issue notice under this sub-section for recovery of any tax due from a taxpayer if the said taxpayer has filed an appeal under section 127 in respect of the order under which the tax sought to be recovered has become payable and the appeal has not been decided by the Commissioner (Appeals), subject to the condition that 4 [ten] per cent of the said amount of tax due has been paid by the taxpayer.”
(2) Subject to sub-section (3), the amount set out in a notice under subsection (1) —
(a) where the amount of the money is equal to or less than the amount of tax due by the taxpayer, shall not exceed the amount of the money; or
(b) in any other case, shall be so much of the money as is sufficient to pay the amount of tax due by the taxpayer.
(3) Where a person is liable to make a series of payments (such as salary) to a taxpayer, a notice under sub-section (1) may specify an amount to be paid out of each payment until the amount of tax due by the taxpayer has been paid.
(4) The date for payment specified in a notice under sub-section (1) shall not be a date before the money becomes payable to the taxpayer or held on the taxpayer’s behalf.
(5) The provisions of sections 160, 161, 162 and 163, so far as may be, shall apply to an amount due under this section as if the amount were required to be deducted from a payment under Division III of Part V of this Chapter.
(6) Any person who has paid any amount in compliance with a notice under sub-section (1) shall be treated as having paid such amount under the authority of the taxpayer and the receipt of the Commissioner constitutes a good and sufficient discharge of the liability of such person to the taxpayer to the extent of the amount referred to in such receipt.
(6A) Notwithstanding anything contained in this Ordinance or any other law or any rule, any decision or judgment of any court, forum or authority, the tax payable under any assessment order shall become immediately recoverable or within the time specified in the notice issued by the income tax authority under this sub-section irrespective of the time provided under any other provision or the said decision or judgment, in case the issue giving rise to the tax payable is decided by a High Court or Supreme Court of Pakistan.
(10) In this section, "person" includes any Court, Tribunal or any other authority
3. Posting of Officer of Inland Revenue - New Section 175C
175C Posting of Officer of Inland Revenue.— Subject to such conditions and restrictions, as deemed fit to be imposed, the Board or the Chief Commissioner, may post an Officer of Inland Revenue or such other officials with any designation working under the control of the Board or the Chief Commissioner, to the premises of any person or class of such persons, to monitor production, supply of goods or rendering of or providing of services and the stock of goods not sold at any time.
C. CLEAN VERSION
For the Amended 3 Section clean version of the Income Tax Ordinance, 2001, please refer to Attachment 3107.2.
D. FURTHER DETAILS & SERVICES
Should you require any clarification or explanations in respect of the above or otherwise, or require Income Tax, Federal & Provincial Sales Tax or Withholding Tax Advisory, Statement or Return Filing or Review services, or related accounting matters like the above, please feel free to email Mr Amsal at amsal@786tax.com with CC to info.kasbati@professional-excellence.com. Your Goodself may continue to get other services from your current Tax & Legal Advisors.
Best regards for Here & Hereafter
Asif S Kasbati (FCA, FCMA & LLB)
Managing Partner
Kasbati & Co (1400+ Tax, Levies, Companies, Economy, Inflation, HR, Banking, Finance, etc
Quick Commentary Service Provider and High Level 440+ Tax & Levies Laws Consultants)
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