Govt Set to Ease Penalties for Major Sales Tax Evaders in Amended Finance Bill

The government will announce major changes in the Finance Bill (2025-26) on June 26 to relax punishments for the biggest sales tax evaders and those involved in tax fraud within the business community for unknown reasons. It is concerning to note that the Federal Board of Revenue (FBR) has undermined the entire spirit of enforcement actions against sales tax evaders under the amended Finance Bill (2025-26) due to pressure from a committee constituted by the Prime Minister and recommendations from the National Assembly and Senate Standing Committee on Finance, sources told ProPakistani. For example, the bank account of any unregistered sales tax person (tax evader) can only be initially suspended for a period of three days starting July 1, 2025. A lengthy procedure has been prescribed for the arrest of tax evaders, requiring approval from a committee of top FBR officials before any arrests can be made. The amended Finance Bill (2025-26) has relaxed sales tax laws regarding the suspension of bank accounts for unregistered sales tax persons who are not ready to enter the sales tax net from July 1, 2025. According to the amended Finance Bill (2025-26), the FBR has simplified the process for barring operations of bank accounts for unregistered sales tax persons. Under the revised section 14AC (bar on operations of bank accounts), this section applies when the Commissioner has reason to believe that a person is engaged in the supply of taxable goods without registration under this Act. The Commissioner must provide three consecutive opportunities for the person to obtain registration under this Act; if the person fails to do so, the Commissioner shall have the power to direct banking companies, scheduled banks, and other financial institutions, through a written order, to intermittently suspend the operation of the bank account for three working days. The Commissioner may repeat the suspension specified in sub-section (2) two more times, with an interval of one week between suspensions, as per the amended Finance Bill (2025-26). The amended Finance Bill (2025-26) has relaxed penalties based on recommendations from the National Assembly and Senate Standing Committees on Finance. The amended Finance Bill (2025-26) states that if any online marketplace, payment intermediary, or courier fails to furnish the prescribed monthly statement by the due date, they will be liable to pay a penalty of Rs. 300,000 for the first default. If they fail to furnish the prescribed statement for two consecutive months, the penalty will increase to Rs. 1 million for each subsequent default within one year. If any online marketplace or courier allows the use of its services in e-commerce by unregistered persons, they will also be liable to pay a penalty of Rs. 300,000 for the first default and Rs. 1 million for each subsequent default. Any person who commits or causes tax fraud, as defined under sub-clauses (a), (b), (c), (d), (e), and (f) of clause (37) of section 2, will be liable, upon conviction by a Special Judge, to imprisonment for a term of up to ten years, a fine of up to ten million rupees, or both. They will also be liable to pay an amount equal to the tax loss confirmed by the Special Judge, including a 100 percent penalty of the tax loss and default surcharge under section 34 of the Act. Any person who commits or causes tax fraud as defined under sub-clauses (g), (h), (i), (j), and (k) of clause (37) of section 2 will be liable, upon conviction by a Special Judge, to imprisonment for a term of up to five years, a fine of up to five million rupees, or both. They will also be liable to pay an amount equal to the tax loss confirmed by the Special Judge, including a 100 percent penalty of the tax loss and default surcharge under section 34 of the Act.