NBR authorised to enter business premises, seize digital records

Under Section 147 of the Income Tax Act, 2023, tax officials are authorized to enter and conduct on-site inspections at the premises, business centres or offices of any commercial or economic establishment.

The National Board of Revenue (NBR) has announced the strengthening of nationwide monitoring, collection and verification of withholding tax (TDS), empowering tax officials to enter business establishments, examine accounts and bank statements, inspect data stored in computers and cloud servers, and, where necessary, temporarily seize digital records and devices.

In a press release issued on Sunday, the NBR said that under Section 147 of the Income Tax Act, 2023, tax officials are authorized to enter and conduct on-site inspections at the premises, business centres or offices of any commercial or economic establishment.

They are also empowered to examine and call for account books, vouchers, bank statements, receipts and any documents related to the financial activities of an establishment.

The press release further stated that tax officials may inspect information stored in the computer systems, cloud servers, digital records or electronic devices of establishments. Where necessary, they are also legally authorized to access such information by bypassing passwords or encryption.

According to the press release, to verify the accuracy of withholding tax deductions, tax officials may temporarily seize and retain account books, documents, electronic records or devices in their custody. They may also collect copies of documents, images or accounts and affix identification marks or official seals on them.

The NBR said that any obstruction or non-cooperation with these revenue collection activities is subject to penalties under Section 147(2) of the Income Tax Act, 2023.

The press release also urged taxpayers to deposit withheld tax into the government treasury through the e-Challan system, mentioning the correct legal provision and the specified economic code for income tax payment.