Islamabad:
Only one month before the presentation of the budget in Parliament, President Asif Ali Zardari promulgated an order, granting extraordinary powers to taxes to instantly recover taxes after declarations of judgments by higher courts and to deputate officers from any view.
The powers were obtained by the federal government through ad hoc legislation after the grounding tax deficit reached 830 billion rupees in 10 months. The government could not wait for the presentation of the budget to the National Assembly, which should be deposited in less than a month.
The tax deficit widens with the adoption of each month despite the record taxation of RS1.3 Billions of additional taxes and the promise of Prime Minister Shehbaz Sharif to minimize the gap by recovery in judicial cases.
The ordinance also allowed the FBR to authorize any employee of the federal or provincial government to grasp and confiscate the goods sold without affixing valid tax stamps, bar codes, banders, stickers, labels or bar codes.
President Zardari published the order on the modification of tax laws, 2025, which took effect from May 2 (Friday), according to the document.
The government has inserted a new section into the income tax order to instantly recover taxes after the announcements of judgments by the higher judicial power by softening the deadlines.
The newly inserted subsection – 3a – in article 138 stipulates that “notwithstanding everything that contained in this order or any other law or any rule, any decision or judgment of any court, forum or authority, the tax to be paid under any provision of this order or any case assessment order The question which gives rise to the tax to be paid is decided by a high court or a supreme court of Pakistan”.
After insertion, the tax will immediately become responsible and the government can recover the contributions directly from the party accounts of the party or third parties who have money to the party.
The amendment has limited the capacity of taxpayers to postpone payment once the responsibility is confirmed by the senior courts and that there could be contradictory judgments of the High Court and in certain cases, all legal questions may not have been raised and judged, said one of the legal experts while explaining the modification.
The Lahore Chamber of Commerce and Industry published a declaration against the hard powers given to the FBR on Saturday, asking the Prime Minister to overthrow the decision.
A similar amendment is brought to article 140 where a new sub-section (6A) has been inserted. The changes would allow taxes to go directly to the bank after making a decision of the court, said legal experts.
For this exercise, the government had given a tax objective of 112.97 Billions of rupees for the FBR and it is already faced with 830 billion rupees of deficits, with two remaining months at the end of the fiscal year. Prime Minister Shehbaz Sharif had promised that at least 400 billion rupees would be recovered in legal affairs to fill the gap until June this year.
However, so far, the overlap has remained around 36 billion rupees in the event of tax. The government expected at least 120 billion recovery rupees in the case of income tax and hoped that 100 billion rupees would fall in April. But that did not happen, although the hopes remain alive.
Intrusive powers granted
Another amendment to the income tax order has been established and a new section – 175C – has been added in law through ad hoc legislation. The FBR has received the power that its “chief commissioner, can display an inland return officer or other civil servants with any designation working under the control of the board of directors or the chief commissioner, in the premises of any person or class of these persons, to monitor the production, the supply of goods or the rendering of services and the stock of non -sold goods at any time”.
Legal experts have argued that the chief commissioner can now display officers in commercial premises to monitor production, actions or services – even for unsold goods – and these modifications reflect a strict application regime and a reduced place for a delay based on disputes.
The setting of unrealistic objectives in the last budget has come to haunt the government, because the cost has so far been paid only by the salaried class and the business sector.
Fed law amendment
The government has also obtained powers to authorize any official of the federal or provincial government to seize and confiscate the goods, which do not have a valid tracing identity.
According to a modification of the Federal Excise Act, the government has expanded the list of goods which can be entered and confiscated. From now on, all goods without affixing or affixing counterfeit tax stamps, bar codes, banders, stickers, labels or bar codes can be confiscated by employees of the federal and provincial government.
According to a third amendment to the Fed law, the FBR in the event of goods subject to monitoring and counterfeiting goods, may authorize any officer or employee of the federal or provincial government to exercise powers and to fulfill the functions of the interior income officer to seize and confiscate counterfeit goods.
