Under the amended Finance Bill 2025–26, the Federal Board of Revenue (FBR) is now required to constitute a three-member committee to authorize the issuance of arrest warrants in major tax fraud cases. This applies specifically where the alleged tax loss exceeds Rs. 50 million.
The revised Section 37A of the Sales Tax Act, 1990 outlines a structured process for inquiry and investigation. Only after the accused fails to appear despite three notices, attempts to abscond, or is suspected of tampering with evidence, can arrest be considered.
The FBR committee can authorize a Commissioner to issue an arrest warrant during the investigation phase. Arrests may also extend to directors or officers of companies found personally responsible for tax fraud, though this does not absolve the company of its financial liabilities.
The amended law also allows for compounding of offences at any stage if the accused pays the full tax amount, default surcharge, and penalty.
All arrests under the Act must follow due process, including informing the accused of the grounds for arrest in writing and adherence to the Code of Criminal Procedure, 1898.
