You are sitting at your desk, sipping chai, when a letter arrives from the FBR (Pakistan's tax office). They are asking about a large cash withdrawal from your business account last month. Your tax return was filed on time. So why is this happening? Because the FBR does not just look at your tax return — it looks at your actual bank activity throughout the year.
What Sets Off These Sudden Notices
The FBR compares your declared income against your utility bills, vehicle registrations, and bank movements — all automatically. If you declared PKR 1.5 million in income but your electricity and gas bills alone came to PKR 600,000, their system asks a simple question: where is the rest of the money coming from? Under Section 114 of the Income Tax Ordinance, you are required to explain it.
Do not ignore these letters. If you leave two notices unanswered, the FBR can freeze your business and personal bank accounts without going to court first. Most business owners only learn about this rule after it happens to them. Reply to every notice, even if you think it is a mistake.
What to Do When a Notice Arrives
Call your taxation services advisor the same day the letter arrives. Most FBR notices give you 21 days to respond. Missing that deadline turns a simple question into a formal tax demand. Your reply should include your bank statements, any invoices related to the flagged transactions, and a copy of your most recent income tax return.
Keep your reply short and factual. Explain each transaction clearly. For example: "The PKR 400,000 withdrawal on 15 March was a supplier payment for raw materials — see attached invoice." Clear evidence closes most notices quickly. Vague replies invite more questions.
Keep Records So You Are Always Ready
Open a folder — on your computer or a physical file — and put twelve months of bank statements and all supplier invoices in it. Update it every month. This way, if a notice arrives, your accountant can pull the evidence in one hour instead of spending days hunting for paperwork.
Also set aside 10% of every payment you receive into a separate savings account. Label it your tax reserve. When a tax demand arrives — and it will at some point — you will have the money ready without disrupting your day-to-day cash flow. That one habit removes most of the panic that comes with FBR notices.
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