Filing a return
How FBR Recovers Unpaid Tax
Recovery starts with a notice under section 138(1) requiring payment within a specified time. Only if that goes unanswered do the recovery modes open: attachment and sale of property, appointment of a receiver, and arrest with detention up to six months. Section 140 separately lets the Commissioner require anyone who owes you money to pay it to him instead.
We do this for clients:Tax Advisory and FBR Representation in Pakistan
Where these figures come from
- Statutory basis
- Income Tax Ordinance, 2001, as amended by the Finance Act 2026, for tax year 2027 (1 July 2026 to 30 June 2027).
- Last checked against the statute
- by BarrioVibe, which files income tax returns through FBR IRIS.
These figures are an estimate computed from the rates above, not tax advice for your situation. Your return depends on facts a form cannot see, so treat the number as a starting point and speak to us before you file on it.
What section 138(2) actually allows
Once the notice has gone unanswered, one or more of these. The third is real, statutory, and almost never mentioned in content aimed at taxpayers.
- Attachment and sale of movable or immovable property of the taxpayer
- Appointment of a receiver for the management of that property
- Arrest of the taxpayer and detention in prison for a period not exceeding six months
- The modes specified in section 48(1)(a), (ca) and (d) of the Sales Tax Act 1990
What to do when a recovery notice arrives
The honest answer is take advice, and quickly, because the timetable is short and the notice itself specifies it. What can be said generally is that the section contemplates further time being allowed, so a request is not a concession that the amount is due, and that the recovery modes do not open while the specified time is running.
It is also worth separating two questions that get merged. Whether the tax is properly due is an appeal question under section 127, with its own thirty-day clock from service of the demand notice. Whether it is being recovered lawfully is a different question under this Part. A person can have a strong appeal and still face recovery if the appeal was never filed in time, which is the most common way this becomes serious.
Questions
The questionspeople ask
Can FBR freeze my bank account?
Section 140 allows the Commissioner to require any person holding money for or on account of the taxpayer to pay it to him, which is the provision behind an attached account. It also reaches anyone who owes or may owe you money, so a notice can go to a customer rather than a bank.
Can I be arrested for unpaid tax in Pakistan?
Section 138(2) includes arrest of the taxpayer and detention in prison for a period not exceeding six months among the modes of recovery. It becomes available only after a notice under section 138(1) has gone unpaid within the time specified or any further time allowed.
What happens first when tax is unpaid?
A notice under section 138(1) in the prescribed form, requiring payment within a specified time. The recovery modes in section 138(2) open only if that notice goes unanswered, so the notice is the point at which to engage.
Can FBR recover tax while my appeal is pending?
Section 138(3A) makes tax immediately payable notwithstanding any judgment, but only where the case has been decided for the department at three appellate forums including the High Court, and recovery is then capped at the lowest demand any of those forums confirmed.
Can my client be told to pay FBR instead of me?
On the face of section 140, yes. The notice may be served on any person owing or who may owe money to the taxpayer, which includes a customer with an unpaid invoice, requiring them to pay the Commissioner instead.
Does interest keep running during a dispute?
Yes. Section 205 charges default surcharge at twelve per cent a year or KIBOR plus three per cent, whichever is higher, from the due date until payment, independently of any recovery action.
Can I ask for more time to pay?
Section 138(2) expressly contemplates it, referring to the time specified in the notice or any further time allowed by the Commissioner. Asking is not an admission that the amount is due.
Is challenging the tax the same as challenging the recovery?
No, and merging them is a common and expensive error. Whether the tax is due is an appeal under section 127, within thirty days of service of the demand notice. Whether recovery is lawful is a separate question, and a strong appeal is no help if it was never filed in time.
A recovery notice has a clock on it
The recovery powers open only once the notice has gone unanswered, so the window between the two is the whole opportunity. That is the point to get advice, not after an account is attached.