The Federal Board of Revenue has raised a substantial tax demand against Sazgar Engineering Works Limited, issuing a claim of Rs 188.9 million for the tax year 2023. The development was disclosed by the company in a filing submitted to Pakistan Stock Exchange on February 4, drawing attention to ongoing scrutiny of corporate tax matters in Pakistan. Sazgar Engineering has formally challenged the demand, signaling its intent to pursue available legal remedies while maintaining that the assessment does not accurately reflect its tax position.
According to the disclosure, the tax demand was issued by the Additional Commissioner Inland Revenue through an order dated September 30, 2025, under Section 122(5A) of the Income Tax Ordinance, 2001. The order pertains to a reassessment of the company’s income tax liabilities for the relevant period. Such reassessments allow tax authorities to revisit previously finalized returns, a practice that has become more frequent amid efforts to strengthen compliance and revenue collection from large and listed entities.
Sazgar Engineering has contested the assessment and has filed a rectification application under Section 221 before the Additional Commissioner Inland Revenue. Alongside this, the company has also submitted a formal appeal with the Commissioner Inland Revenue Appeals, challenging the basis and calculations of the revised tax demand. In its filing, the company stated that it expects a favorable outcome from both proceedings and has therefore not made any financial provision for the disputed amount in its quarterly and half-yearly financial statements.
The company’s management has maintained that the tax demand is unjustified and believes the matter will be resolved through the available legal channels. Sazgar Engineering further indicated that the dispute is not expected to have a material impact on its financial position or operational performance in the near term. The company remains focused on its core business activities, which include the manufacturing of motorcycles, three-wheelers, and the assembly of electric vehicles, segments that continue to see demand in the local market.
The tax demand comes at a time when FBR has intensified its review of corporate tax assessments, particularly involving listed companies, as part of broader measures to enhance transparency and improve revenue outcomes. While such actions have increased engagement between tax authorities and corporates, they have also led to a rise in legal challenges as companies seek clarification and redress through formal appeal mechanisms. For Sazgar Engineering, the outcome of the proceedings will determine whether the reassessed liability stands or is revised, as the company continues to assert confidence in its position.
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