Islamabad: Just weeks ahead of the federal budget presentation, President Asif Ali Zardari has promulgated the Tax Laws Amendment Ordinance, 2025, granting the Federal Board of Revenue (FBR) extraordinary powers to recover taxes immediately after judgments by superior courts.
The ordinance, effective from May 2, enables the FBR to bypass previously allowed timeframes for tax recovery and initiate direct action — including freezing bank accounts — once a liability is upheld by the High Courts or Supreme Court. It also allows tax authorities to depute officers at any premises and authorizes seizure of goods being sold without proper tax labeling.
These sweeping powers have been introduced as part of an ad hoc legislative move to address the Rs830 billion revenue shortfall recorded in the first 10 months of the current fiscal year. With only two months left before the fiscal year closes, the government is under pressure to meet its Rs12.97 trillion tax target.
Key amendments have been made to Sections 138 and 140 of the Income Tax Ordinance. A new subsection (3A) allows immediate recovery of tax dues once a favorable court ruling is secured, while subsection (6A) empowers tax officials to act directly against defaulters’ bank accounts.
Legal experts warn the changes limit taxpayers’ ability to defer payment, even in cases where appeals or conflicting judgments may still be pending. Business groups, including the Lahore Chamber of Commerce and Industry (LCCI), have criticized the move, calling it excessive and demanding its reversal.
The ordinance also allows the FBR to enlist employees from other government departments to aid in enforcement, particularly for monitoring the use of tax stamps and labels.
The federal government had earlier projected that Rs400 billion would be recovered from pending court cases by June. However, actual collections remain sluggish, with only around Rs36 billion recovered so far, casting doubt on whether the goal will be met without stronger enforcement measures.
The budget for FY2025–26 is expected to be tabled in Parliament within the next month.
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