Written by Shahnawaz Akhter Many citizens in Pakistan take the Federal Board of Revenue (FBR) lightly, especially when it comes to concealment of income. However, under Pakistan’s tax laws, FBR does have the legal authority to arrest taxpayers if a serious income tax crime is established. The Income Tax Ordinance, 2001 (updated for tax year 2026) clearly defines the power, conditions, and procedure of arrest under Sections 203B and 203C. When Can FBR Arrest a Taxpayer? (Section 203B) Under Section 203B, a taxpayer may be arrested only when all legal conditions are fulfilled. Conditions for Arrest FBR can arrest a taxpayer if: • An audit is conducted under Section 177(8) read with Section 214C • An assessment or amended assessment is made under Section 121 or 122 • The assessing officer records a clear finding of concealment of income • The concealment results in non-payment of tax exceeding: Taxpayer Status Tax Amount Threshold Filer Rs. 100 million or above Non-filer Rs. 25 million or above âš Arrest is not automatic. It requires material evidence and approval from a high-level committee. Approval Committee for Arrest No arrest can be made without written approval of a special committee comprising: • Minister for Finance and Revenue • Chairman, Federal Board of Revenue • Senior-most Member of the Board This safeguard ensures arrests are used only in serious tax crimes. Arrest of Company Directors and Officers If the offender is a company, FBR can arrest: • Any director or officer • Who is personally responsible for actions leading to concealment of income 🔔 Important: Arrest of directors does not absolve the company from payment of tax, default surcharge, or penalties. Can the Offence Be Compounded Instead of Arrest? Yes. Under Section 203B(4): • The Chief Commissioner, with Board approval, may compound the offence • Compounding is possible before or after recovery proceedings • The taxpayer must pay: o Due tax o Default surcharge o Penalty as determined under law This provision allows resolution without arrest, provided dues are cleared. Procedure of Arrest – Section 203C Explained FBR must strictly follow the Code of Criminal…