Tax Laws Allow Arrest Taxpayers in Pakistan for Default
In Pakistan, the Federal Board of Revenue (FBR) has the power to arrest taxpayers who default on their taxes. This power is granted under the Income Tax Ordinance of 2001, which was updated up to June 30, 2022.
According to the Income Tax Ordinance, the FBR has been empowered to recover tax out of a property and through the arrest of taxpayers under Section 138. If a taxpayer does not pay the amount specified in a notice served by the Commissioner within the time limit, the Commissioner may proceed to recover the amount by attachment and sale of movable or immovable property, appointment of a receiver for the management of the property, the arrest of the taxpayer, and detention in prison for up to six months.
For recovery of tax, the Commissioner shall have the same powers as a Civil Court under the Code of Civil Procedure, 1908, for the recovery of any amount due under a decree. The Board may also 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.
Section 138A of the ordinance explains the recovery of tax by the District Officer (Revenue). The Commissioner may forward a certificate to the District Officer (Revenue) specifying the amount of any tax due from the taxpayer, and on receipt of such certificate, the District Officer (Revenue) shall proceed to recover the amount as if it were an arrear of land revenue. The District Officer (Revenue) shall have the same powers as a Civil Court under the Code of Civil Procedure, 1908, for the recovery of the amount due under a decree.
Section 138B of the Income Tax Ordinance, 2001, explains the state in bankruptcy. If a taxpayer is declared bankrupt, the tax liability under this Ordinance shall pass on to the estate in bankruptcy. If tax liability is incurred by an estate in bankruptcy, the tax shall be deemed to be a current expenditure in the operations of the estate in bankruptcy and shall be paid before the claims preferred by other creditors are settled.
In conclusion, tax laws in Pakistan allow authorities to arrest defaulting taxpayers for not paying their taxes. These laws are enforced by the Federal Board of Revenue, which has been given powers under the Income Tax Ordinance, 2001. Taxpayers who fail to pay their taxes within the specified time limit may face attachment and sale of their property, the appointment of a receiver, or even imprisonment for up to six months. District Officers (Revenue) may also be involved in the recovery of tax, and in cases of bankruptcy, tax liability shall be passed on to the estate in bankruptcy. It is essential for taxpayers to fulfill their tax obligations to avoid legal consequences under the Income Tax Ordinance.
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