The Federal Board of Revenue (FBR) has enhanced the authority of the Director of the Directorate General of Intelligence & Investigation (Inland Revenue), allowing them to approve the initiation of inquiries against businessmen suspected of tax fraud.

This power, however, requires prior approval from the FBR Member IR (Operations).

Through a notification issued on Tuesday, the FBR amended Sales Tax General Order (STGO) 2 of 2025, formally including the Director of Intelligence & Investigation (Inland Revenue) alongside the Commissioner of Inland Revenue in the approval process.

According to the revised procedure, no inquiry can begin without approval from either the Commissioner or the Director. After completing an inquiry, the decision to launch a full investigation can only be taken with the consent of the FBR Member IR (Operations).

Before seeking this approval, the Commissioner or Director must also consult with two representatives of the business community, chosen from a list notified by the Board.

Earlier, under Sales Tax Circular No. 02 of 2025-26, a new sub-section in Section 37 of the Sales Tax Act granted Inland Revenue officers powers equivalent to those of a civil court under the Code of Civil Procedure, 1908.

The Finance Act 2025 further streamlined the framework for probing sales tax fraud, clarifying that an inquiry can only be initiated by an officer of Inland Revenue after obtaining approval from the Commissioner, based on solid evidence indicating tax evasion or other offenses requiring prosecution.

This step is part of the FBR’s ongoing efforts to strengthen oversight and improve the efficiency of tax investigations.