ISLAMABAD: In a bid to increase revenue generation and address existing loopholes in the tax sector, President Asif Ali Zardari has promulgated the Tax Laws (Amendment) Ordinance, 2025 which is aimed at recovering tax amounts tied up in litigation, The News reported on Sunday.
Under this ordinance, Inland Revenue Officers are authorised to be stationed at business premises to monitor production and collect taxes immediately following superior courts’ decisions. The ordinance also empowers provinces to confiscate tax-evaded cigarettes.
The ordinance, titled the Tax Laws (Amendment) Ordinance, 2025, shall come into force at once. One of its key objectives is to recover pending tax amounts tied up in litigation. The government has agreed with the IMF to recover billions of rupees in the remaining months to meet the Federal Board of Revenue’s (FBR) target of Rs12,332 billion by June 30, 2025. The Income Tax Ordinance, 2001 has been amended as follows:
- Section 138 Amendment: After sub-section (3), a new sub-section (3A) has been inserted, stating that any tax payable under the ordinance or an assessment order shall become immediately payable — or within the time specified in a notice issued by the income tax authority — once the issue is decided by a high court or the Supreme Court, irrespective of any other provision or judicial decision.
- Section 140 Amendment: After sub-section (6), a new sub-section (6A) has been added, stipulating that any tax payable under an assessment order shall become immediately recoverable — or within the time specified in a notice — once the matter is adjudicated by a high court or the SC, overriding any other provision or judicial ruling.
- New Clause 175C: This clause authorises the FBR or chief commissioner to post Inland Revenue officers at business premises to monitor production, supply of goods, provision of services, and unsold stock, subject to specified conditions.
In a significant move to address inequities in Pakistan’s tax structure, the FBR has operationalised Section 175C of the Income Tax Ordinance, 2001. This provision enables Inland Revenue officers to monitor production, stock, and supply of goods, and services — particularly by integrated enterprises in the largely undocumented service sector. Similar enforcement mechanisms under the Sales Tax Act, 1990, and the Federal Excise Act, 2005, previously applied only to goods.
This amendment extends oversight to services, targeting the underground economy, which is estimated to exceed 30% of formal GDP. The measure responds to growing public concern over tax burdens on the salaried class and documented manufacturers. By enhancing documentation in the high-potential service sector — which constitutes nearly 60% of GDP — the FBR aims to create fiscal space that could allow potential reductions in personal income tax rates for salaried individuals.
Currently, over 70% of service-sector enterprises remain unregistered, leading to significant tax leakages.
The ordinance specifically targets under-documented, high-revenue businesses, including restaurants, hotels, guest houses, marriage halls, clubs, courier and cargo services, beauty parlours, clinics, hospitals, diagnostic laboratories, gyms, foreign exchange dealers, photographers, and traders. Notably, some private hospitals reportedly charge between Rs100,000 to 200,000 per day for inpatient rooms— rates surpassing those of five-star hotels — while underreporting revenues and evading taxes.
The FBR emphasises that the legislation ensures those profiting from Pakistan’s urban and semi-urban markets fulfil their tax obligations. It urges stakeholders to cooperate with tax authorities to foster a fair and robust fiscal system that does not penalise compliance or reward evasion.
The Federal Excise Act, 2005, has also been amended: Section 26 Amendment: Sub-section (1) now includes goods without affixed or counterfeit tax stamps, barcodes, banderoles, stickers, or labels as required under Section 45A.
Section 27 Amendment: Sub-section (1) now covers goods with counterfeit or missing tax stamps, barcodes, banderoles, stickers, or labels. A new sub-section (4) authorises the FBR to delegate powers to federal or provincial officers to enforce Section 26 and sub-section (1) of Section 27 for goods monitored under Section 45A or counterfeited goods. These amendments strengthen enforcement mechanisms to curb tax evasion and ensure compliance across sectors.
President Zardari promulgated four ordinances a day before convening the National Assembly session. Besides the Tax Laws Amendment Ordinance, 2025, the president promulgated the Federal Ministers and Ministers of State (Salaries, Allowances and Privileges) Amendment Ordinance, 2025, the CDA Amendment Ordinance, 2025, and the National Agri-Trade and Food Security Authority Ordinance, 2025.
The National Assembly session has been summoned for 5pm on Monday. Under the law, a presidential ordinance can be issued only when the Senate and the National Assembly are not in session.
As per the Federal Ministers and Ministers of State (Salaries, Allowances and Privileges) Amendment Ordinance 2025, the Federal Ministers and Ministers of State (Salaries, Allowances and Privileges) Act, 1975 has been amended. This ordinance will come into effect from January 1, 2025.
Under the ordinance, federal ministers and ministers of state will receive salaries equal to those of members of the National Assembly.
Under the National Agri-Trade and Food Security Authority Ordinance, 2025, the National Agri-Trade and Food Security Authority shall be established. The authority shall have a Board of Governors. It shall have a chairperson and a DG shall be appointed.
This authority shall formulate guidelines for import and export. It shall take steps to ensure SPS standards. The authority shall constitute its own advisory committees. It shall ensure cooperation with the provinces. It shall establish a laboratory for checking samples.
