The Federal Board of Revenue (FBR) has granted new powers to the Director of the Directorate General of Intelligence & Investigation (Inland Revenue) to approve inquiries into potential tax fraud.
Under the revised Sales Tax General Order (STGO) 2 of 2025, no inquiry can be initiated without prior approval from either the Commissioner of Inland Revenue or the Director of Intelligence & Investigation. After completing an inquiry, formal investigation approval requires consultation with the FBR Member IR (Operations).
The updated rules also require that, before seeking final approval, the Commissioner or Director must consult two representatives from the business community. These representatives are selected from a list officially notified by the FBR. This ensures transparency and encourages business community participation in tax enforcement processes.
Previously, Sales Tax Circular No. 02 of 2025-26 allowed Inland Revenue officers to exercise civil court powers under Section 37 of the Sales Tax Act and the Code of Civil Procedure, 1908. The Finance Act 2025 further streamlined powers for inquiry and investigation into sales tax violations.
According to the new framework, an Inland Revenue officer can only start an inquiry after obtaining approval from the Commissioner, based on evidence indicating tax fraud or other offenses that may require prosecution. This process ensures inquiries are conducted systematically and legally.
Officials said the amendments aim to improve oversight, enhance transparency, and strengthen the FBR’s ability to curb tax evasion. By including business community representatives in the approval process, the FBR hopes to build trust and maintain a fair approach to enforcement.
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The FBR emphasized that these changes reflect its commitment to modernizing tax investigations while ensuring legal compliance. Authorities believe the new framework will make inquiries more effective, reduce delays, and enhance accountability in tax administration.
