ISLAMABAD – The Federal Board of Revenue (FBR) has defended its recovery of Rs30 million from a taxpayer’s bank account, saying the action was taken in accordance with the Income Tax Ordinance, 2001, after the individual failed to clear outstanding tax liabilities.
In a statement, the FBR alleged that the taxpayer attempted to stop the recovery by submitting forged appellate orders to his bank. It said the documents were not issued by the department, carried no official barcode, did not exist in its Inland Revenue System (IRS), and were therefore fake.
According to the FBR, the individual had publicly described himself as a non-resident Pakistani but declared himself a resident in income tax returns filed for the tax years 2017 and 2018. Under Pakistan’s tax laws, resident individuals are generally liable to pay tax on their worldwide income.
The tax authority said the individual declared foreign income of Rs23.52 million as exempt in each of the two tax years, exceeding the applicable exemption threshold of Rs5 million.
It added that notices were issued under Section 122(9) of the Income Tax Ordinance, providing the taxpayer with opportunities to submit documentary evidence in support of the claimed exemption. However, the FBR alleged that no supporting evidence was provided.
Following the amendment of the tax assessment, the FBR raised a demand of Rs30 million. It said recovery proceedings were initiated only after the amount remained unpaid, with the funds recovered directly from the taxpayer’s bank account under the relevant provisions of the law.
Tax expert Amer Sharif said the Income Tax Ordinance allows the FBR to recover outstanding tax directly from a taxpayer’s bank account, but only after completing the prescribed legal process.
He explained that Section 122(9) empowers the tax authority to amend an assessment after issuing notice and providing the taxpayer an opportunity to respond. Once the amended assessment is finalised, Sections 137 and 138 govern the payment of tax and issuance of a recovery notice.
According to Sharif, Section 140 authorises the FBR to direct a bank to transfer funds from a taxpayer’s account to recover unpaid taxes, provided the assessment and recovery procedures have already been completed.
He added that while Section 111 of the Income Tax Ordinance deals with unexplained income or assets, the FBR’s statement does not indicate that the provision was invoked in this case. Instead, the dispute relates to the taxpayer’s claim for exemption on foreign income and the alleged failure to provide documentary evidence supporting that claim.
