Karachi, June 29, 2025 – In a significant move to tighten tax compliance, the Federal Board of Revenue (FBR) has been granted enhanced powers under the Finance Act, 2025, to recover sales tax based on the information derived from withholding income tax deductions. This amendment is expected to boost FBR’s enforcement capabilities and expand the taxpayer base. The change comes through a key amendment to Section 11D of the Sales Tax Act, 1990. Originally introduced in the Finance Act, 2024, Section 11D dealt with best judgment assessments for non-filers. However, under the new Finance Act, 2025, the scope of this section has been broadened with the addition of sub-section 5, which specifically targets entities liable to be registered under clause (25) of section 2 of the Sales Tax Act. According to the newly inserted provision, if a person falls under the definition of a taxable entity due to tax withheld under section 236G of the Income Tax Ordinance, 2001, and fails to file a return upon notice, the FBR can assess sales tax liability on the basis of value addition. This assessment may be conducted using information from purchase data available through the withholding of income tax, particularly under section 236G, which deals with suppliers to…