Senate Panel Orders FBR to Stop Freezing Bank Accounts Without Notice

The Senate Standing Committee on Finance has asked the Federal Board of Revenue (FBR) to withdraw its recent instructions on the attachment of the bank accounts of tax defaulters, being ‘against the ongoing efforts to promote tax culture and stop freezing the accounts without prior intimation.

Briefing the committee, Member Inland Revenue Operation FBR, Qaiser Iqbal, said that former Chairman FBR, Shabbar Zaidi, had issued instructions in May 2019 regarding the attachment of bank accounts, which were against the law. He said the former Chairman kept the powers of Commissioners with himself. There were cases when tax defaulters emptied their bank accounts within five to 10 minutes, he stressed.

Senate Standing Committee Finance has recommended to the Federal Board of Revenue to immediately withdraw its new instructions about the attachment of the bank accounts of tax defaulters. The committee unanimously decided that the new instruction are against the promotion of tax culture and must be immediately withdrawn. Senator Saleem Mandviwalla said that the former FBR Chairman should be called in the committee meeting to explain his position.

It is to note that FBR recently withdrew instructions issued by former FBR Chairman, Shabbar Zaidi, to tax officials seeking FBR chairman’s approval and a 24-hour prior intimation to the CEO/principal officer/owner before attachment of a bank account.

In May 2019, Zaidi had issued his first major directive to the field formations that there would be no bank account attachment unless the taxpayer’s chief executive officer/owner was informed at least 24 hours prior to attachment and the approval of the chairman FBR was obtained.

Member Operation FBR, Qaiser Iqbal, informed the committee that power rested with the commissioner to attach a bank account, and there is a laid down mechanism and no account is closed without asking. However, he said that the former chairman has taken the power of the commissioner.

The FBR member said that through the new instructions, the FBR streamlined the system of attachment of bank accounts. The FBR had directed Chief Commissioners that the coercive measures including attachment of bank accounts should be avoided until the case was decided at the level of the first forum of appeals i.e. Commissioner Inland Revenue (Appeals), he added.

Moreover, a committee comprising Senior Commissioner IR headed by Chief Commissioner IR may be constituted at the formation level to deliberate on the cases before according approval of the coercive measures. Therefore, after the implementation of the new system, the FBR had withdrawn the earlier instructions of May 2019.

About the digital payments for the corporate sector, the Standing Committee was informed that it has been decided in September through an amended ordinance that more than 2.5 lac in any head digital payments will be made. The system of digital payment would be implemented from November 1, 2021, the meeting was informed that instead of cheques, digital payments will be made.

Senator Mohsin Aziz said that the corporate sector may not be familiar with digital payments which would create many problems for them.

Senator Farooq H Naik has asked the FBR officials as to what was the urgency to implement the digital payment through ordinance as usually such measures are taken in the money bill. The chairman of the committee said the committee did not support the ordinance.