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Business Recorder
5 days ago
- Business
- Business Recorder
Pakistan govt unveils revised tax fraud punishment procedure
ISLAMABAD: Finance Minister Muhammad Aurangzeb, Wednesday, presented revised procedure for penalty, arrest and imprisonment to the persons committing tax fraud with new safeguards for the business community to avoid misuse of powers by the Federal Board of Revenue (FBR). The Senate Standing Committee on Finance and Revenue, under the chairmanship of Senator Saleem Mandviwalla, held its fifth consecutive session to deliberate on the Finance Bill 2025 and the Annual Budget Statement laid before Parliament. Aurangzeb informed that on special directive of Prime Minister Shehbaz Sharif, four safeguards have been placed to ensure that powers to arrest must not be misused by the tax officials of the FBR. Arrest for tax fraud: Senate panel for defining a threshold Aurangzeb stated that the government would incorporate four major safeguards for allowing arrests on tax frauds in order to avoid misuse of powers. In the first pre-requisite, the minister said that the accused of tax fraud would be arrested where there was a fear of his escape, but it would be done with the approval of three members of the Board, in grade 21, notified by the FBR. The tampering of proof could be the second reason, and the third reason could be tax fraud amounting to Rs50 million. The fourth condition of the arrest, he said, would only be possible if someone received three notices but not bothered to respond. The Senate Standing Committee on Finance has unanimously recommended for approval and collection of GST from erstwhile FATA/PATA areas and refrained from backing out at the time of approval of the budget from the Parliament. Chairman of the Finance Committee objected that the FBR cannot give sales tax exemption to only PIA. This is a discriminatory exemption and would be challenged in courts once become law. The proposal should cover all leased aircrafts and not be limited to one airline. The committee discussed a range of critical recommendations and policy matters: The committee strongly recommended withdrawing the proposed 18 per cent GST on solar panels. Members observed that ahead of the budget, certain stakeholders had imported and dumped solar equipment in anticipation of the tax hike. The chairman emphasized the discriminatory nature of the move, saying, 'The committee rejects the sudden imposition of GST on solar imports and urges immediate withdrawal.' A seven per cent pension increase for retired government employees was proposed. Proposals were put forward to extend the duration of family pensions. The Higher Education Commission (HEC) was recommended for additional funding allocations. The committee expressed serious concern over the increase in GST from 12 per cent to 18 per cent on small vehicles, including 850cc cars. Chairman Mandviwalla called the 18 per cent sales tax on a Rs3 million vehicle 'unfair,' a sentiment echoed by several senators. Proposals were discussed to moderate the tax to 14 per cent or 15 per cent instead. Senator Shibli Faraz criticised the inequity, noting that while tax relief is being extended to certain regions, small car owners continue to face high taxation. FBR Chairman Rashid Mehmood Langrial said the IMF placed a principle that wherever the reduced GST rate was five percent, it would go up to 10 percent, and any rate of over five percent would go to the standard rate of 18 percent. From the next fiscal year, iron scrap importers will be obligated to sell only to registered manufacturers. Officials said this measure aims to eliminate the misuse of 'flying invoices' and commercial manipulation in scrap trade. The committee also held into consideration the recommendations put forward by Senator Farooq Hamid Naek related to tax fraud and its offences and punishments. Senator Mandviwalla praised the overall conduct and participation of members in the budget discussions, highlighting that the nature of engagement this year signifies a transparent and participatory process reflective of public will. The committee witnessed enthusiastic participation from members of the Senate. Senators Shibli Faraz, Anusha Rahman Ahmad Khan, Faisal Vawda, Muhammad Abdul Qadir, Mohsin Aziz, Kamran Murtaza, Manzoor Ahmad, Agha Shahzaib Durrani, Ahmed Khan, Zarqa Suharwardy Taimur, Waqar Mehdi, Jam Saifullah Khan, Irfan ul Haq Siddique, Khalida Ateeb and other members attended the meeting. Copyright Business Recorder, 2025
Business Recorder
5 days ago
- Business
- Business Recorder
Govt unveils revised tax fraud punishment procedure
ISLAMABAD: Finance Minister Muhammad Aurangzeb, Wednesday, presented revised procedure for penalty, arrest and imprisonment to the persons committing tax fraud with new safeguards for the business community to avoid misuse of powers by the Federal Board of Revenue (FBR). The Senate Standing Committee on Finance and Revenue, under the chairmanship of Senator Saleem Mandviwalla, held its fifth consecutive session to deliberate on the Finance Bill 2025 and the Annual Budget Statement laid before Parliament. Aurangzeb informed that on special directive of Prime Minister Shehbaz Sharif, four safeguards have been placed to ensure that powers to arrest must not be misused by the tax officials of the FBR. Arrest for tax fraud: Senate panel for defining a threshold Aurangzeb stated that the government would incorporate four major safeguards for allowing arrests on tax frauds in order to avoid misuse of powers. In the first pre-requisite, the minister said that the accused of tax fraud would be arrested where there was a fear of his escape, but it would be done with the approval of three members of the Board, in grade 21, notified by the FBR. The tampering of proof could be the second reason, and the third reason could be tax fraud amounting to Rs50 million. The fourth condition of the arrest, he said, would only be possible if someone received three notices but not bothered to respond. The Senate Standing Committee on Finance has unanimously recommended for approval and collection of GST from erstwhile FATA/PATA areas and refrained from backing out at the time of approval of the budget from the Parliament. Chairman of the Finance Committee objected that the FBR cannot give sales tax exemption to only PIA. This is a discriminatory exemption and would be challenged in courts once become law. The proposal should cover all leased aircrafts and not be limited to one airline. The committee discussed a range of critical recommendations and policy matters: The committee strongly recommended withdrawing the proposed 18 per cent GST on solar panels. Members observed that ahead of the budget, certain stakeholders had imported and dumped solar equipment in anticipation of the tax hike. The chairman emphasized the discriminatory nature of the move, saying, 'The committee rejects the sudden imposition of GST on solar imports and urges immediate withdrawal.' A seven per cent pension increase for retired government employees was proposed. Proposals were put forward to extend the duration of family pensions. The Higher Education Commission (HEC) was recommended for additional funding allocations. The committee expressed serious concern over the increase in GST from 12 per cent to 18 per cent on small vehicles, including 850cc cars. Chairman Mandviwalla called the 18 per cent sales tax on a Rs3 million vehicle 'unfair,' a sentiment echoed by several senators. Proposals were discussed to moderate the tax to 14 per cent or 15 per cent instead. Senator Shibli Faraz criticised the inequity, noting that while tax relief is being extended to certain regions, small car owners continue to face high taxation. FBR Chairman Rashid Mehmood Langrial said the IMF placed a principle that wherever the reduced GST rate was five percent, it would go up to 10 percent, and any rate of over five percent would go to the standard rate of 18 percent. From the next fiscal year, iron scrap importers will be obligated to sell only to registered manufacturers. Officials said this measure aims to eliminate the misuse of 'flying invoices' and commercial manipulation in scrap trade. The committee also held into consideration the recommendations put forward by Senator Farooq Hamid Naek related to tax fraud and its offences and punishments. Senator Mandviwalla praised the overall conduct and participation of members in the budget discussions, highlighting that the nature of engagement this year signifies a transparent and participatory process reflective of public will. The committee witnessed enthusiastic participation from members of the Senate. Senators Shibli Faraz, Anusha Rahman Ahmad Khan, Faisal Vawda, Muhammad Abdul Qadir, Mohsin Aziz, Kamran Murtaza, Manzoor Ahmad, Agha Shahzaib Durrani, Ahmed Khan, Zarqa Suharwardy Taimur, Waqar Mehdi, Jam Saifullah Khan, Irfan ul Haq Siddique, Khalida Ateeb and other members attended the meeting. Copyright Business Recorder, 2025
Business Recorder
6 days ago
- Business
- Business Recorder
Finalisation of Finance Bill 2025: Senate panel asks FBR to stay out of provinces' domain
ISLAMABAD: The Senate Standing Committee on Finance and Revenue, Monday, warned the Federal Board of Revenue (FBR) to remain out of the domain of provinces during finalisation of the Finance Bill 2025-26. The meeting chaired by Senator Saleem Mandviwalla, held its fourth consecutive session in the Parliament House, to review the Finance Bill, which includes the Annual Budget Statement presented to the Upper House on June 10 under Article 73 of the Constitution. Mandviwalla warned that the FBR should not enter into the domain of provinces by including services in different provisions of the Finance Bill 2025-26. Sindh Revenue Board (SRB) has submitted different observations on Finance Bill 2025-26 where the FBR has illegally entered into the domain of services, he added. FBR Member Inland Revenue (Policy) Dr Najeeb Ahmad informed that the gradual withdrawal of sales tax exemption from erstwhile tribal areas in phase-wise manner has been agreed between the International Monetary Fund (IMF) and the Federal Board of Revenue (FBR). Budget FY2025-26: Sindh announces to expand sales tax to all major services The committee examined the tax exemption policy for FATA/ PATA, which will begin phasing out with a 10 per cent GST in the next fiscal year— gradually increasing to 18 per cent. The FBR Member said that this two-stage process has been agreed with the IMF for the withdrawal of sales tax exemption on erstwhile tribal areas. Senator Shibli Faraz asked what tangible benefits have tax exemptions brought to these regions. Where is the investment and employment, he asked. The finance minister is scheduled to brief the committee on this issue in the next session. The meeting was attended by Finance Minister Muhammad Aurangzeb, Senators Farooq Hamid Naek, Syed Shibli Faraz, Anusha Rehman Ahmad Khan, Mohsin Aziz, Ahmed Khan, Manzoor Ahmad, Mohammad Abdul Qadir, and senior officials from the FBR and other key departments. Opening the session, Chairman Mandviwalla lauded the 'diligence and active presence' of the federal minister for finance, stating: 'The minister's consistent participation and valuable input during these sessions reflect the government's commitment to transparent fiscal reforms.' Senator Anusha Rehman raised critical points about the regulation of e-commerce platforms emphasising not to burden unemployed individuals specifically (youth and women) making ends meet from home. Only register platforms doing business above Rs20million. On the proposed e-billing system, Senator Mohsin Aziz noted, 'Malaysia began phased implementation three years ago. We must assess our readiness.' Chairman Mandviwalla acknowledged the valuable suggestions of Senator Mohsin Aziz and Senator Anusha Rehman, stating to bring written proposals for phased implementation of e-billing. 'Talking will not suffice.' The committee also discussed the Islamabad Capital Territory (Tax on Service) 2001, Provisions of the Finance Bill, 2005. It was discussed that as per the IMF benchmark 'negative list of services' should also be developed. While discussing the Public Finance Management Act, 2019 a major disclosure rocked the session, revealing billions held and invested by public sector entities which are not transferred to central treasury but invested by these entities for profit. Senator Anusha Rehman condemned this, stating the government is borrowing its own money from banks and paying interest, while institutions profit off public funds. The committee directed the Establishment Division and Ministry of Finance to submit complete account details of all such institutions, lists of investments and profits earned, legal basis for withholding funds from the national treasury. The committee, while discussing the Federal Excise Provisions of Finance Bill, 2025, approved abolishing federal excise duty (FED) on first purchase of immovable property. The Senate Committee will reconvene Tuesday with the finance minister scheduled to address tax exemption policies and provide further clarity on institutional financial practices. Copyright Business Recorder, 2025
Business Recorder
14-06-2025
- Business
- Business Recorder
Aurangzeb tells Senate body: Govt plans foreclosure laws to boost housing finance
ISLAMABAD: In a diplomatic embarrassment for India again, this time the World Bank Board approved $700 million for Reko Diq project – a game changer, which is expected to generate exports worth $2.8 billion by 2028. This was stated by Finance Minister Muhammad Aurangzeb while briefing the Senate Standing Committee on Finance and Revenue. Aurangzeb also announced that government will introduce foreclosure laws to encourage bank-led financing in the housing sector, besides a new mechanism will be developed to eliminate non-filers to document the cash economy. Housing scheme with SBP's help: Rs5bn set aside for mark-up subsidy The committee commenced its first session to deliberate on the Finance Bill, 2025, including the Annual Budget Statement presented in the House, in accordance with Article 73 of the Constitution. The committee meeting chaired by Saleem Mandviwalla, here on Friday. Aurangzeb said that India tried again like it attempted in creating hurdles in the approval of the International Monetary Fund (IMF) loan. This time again India failed. This approval of $700 million which will be provided by the IFC was granted during a World Bank Board meeting in Washington. It is a significant economic diplomatic victory for Pakistan and a major setback for India, which had actively lobbied against the funding. Aurangzeb delivered an overview of the budget, economic progress, and the geopolitical headwinds confronting Pakistan. 'We have not imposed any new tax in the budget. Instead, we have taken new tax measures worth Rs312 billion through compliance and enforcement', said the minister, and confirmed that these steps were endorsed by the IMF under tax enforcement commitments. The finance minister shared economic data remarking that exports have increased by 7.8 percent in the current fiscal year. Last year's exports were $29 billion, this year we have already hit $30 billion in 11 months, he added. He said that there are no longer obstacles to opening Letters of Credit (LCs), and anyone saying otherwise is spreading misinformation. Facing questions on privatisation, Aurangzeb admitted, 'It must be accepted that privatisation targets were not achieved.' However, he reassured the committee that 'PIA has now been brought back into the privatisation stream.' Responding to the long-standing debate on agricultural taxation, he asserted, 'Earlier it was said agriculture tax can never be imposed. Now, they say it can't be collected. We will collect it—just give us the chance.' Provinces are set to begin agricultural income tax collection from July 1, 2025, he added. Copyright Business Recorder, 2025
Express Tribune
10-06-2025
- Business
- Express Tribune
Federal Budget 2025-26 to be presented in National Assembly today
Listen to article The Federal Budget for the upcoming fiscal year will be presented in the National Assembly today (Tuesday) with discussion to begin June 13 and carry on till June 21. Finance Minister Muhammad Aurangzeb will present the budget in the Assembly, after which he will lay a copy of the Finance Bill 2025-26, including the Annual Budget Statement, before the Senate for further consideration. On Monday, Pakistan unveiled its Economic Survey 2024-25, revealing measurable improvement across key indicators, though challenges remain in the agriculture and manufacturing sectors. The survey showed that the government has managed to consolidate economic recovery by avoiding a "sugar rush" and stabilise the external sector, yet again, it could not meet the most critical targets necessary to give economic growth figures credibility and help increase investment. Economic growth rate stays at 2.7%, which is a right way to go for sustainable growth in order to avoid boom-bust cycles, said the finance minister, while referring to historical patterns of achieving higher growth rates followed by collapse the next year. However, the claimed growth rate is below the target of 3.6% and is also disputed by independent economists. Here is a look at its key highlights: Growth and investment Real GDP recorded growth of 2.68% in FY2025, underpinned by broad-based stabilization across key macroeconomic indicators. The industrial sector posted 4.77% growth driven by manufacturing recovery, while the services sector expanded 2.91%, maintaining its position as the largest GDP contributor with a 58.40% share. GDP at current market prices increased to Rs114,692 billion, reflecting a 9.1% increase from the previous year's Rs105,143 billion. The investment-to-GDP ratio reached 13.8% compared to 13.1% in FY2024, while the saving-to-GDP ratio increased to 14.1% from 12.6% last year. Fiscal performance The fiscal deficit narrowed to 6.5% of GDP from 7.4% last year. Revenue collection grew 29% to Rs10.8 trillion, with tax revenue increasing 38%. Current expenditures rose 26% due to higher interest payments. Monetary situation Inflation declined sharply to a record low of 0.3% in April 2025, down from 17.3% in April 2024. The average CPI inflation for July-April was 4.7%, marking a significant decrease from 26.0% in the same period last year. The State Bank cut policy rates by 450 basis points to 17.5% since July 2024. Broad money supply grew 13.7%. Agriculture sector The agriculture sector demonstrated resilience in FY2025, recording growth of 0.56%, primarily driven by livestock performance. The sector's share in GDP declined slightly to 23.54% from 24.03% in FY2024. Important crops declined by 13.49% due to reduced cultivation area and adverse weather conditions, significantly affecting cotton (-30.7%), wheat (-8.9%), sugarcane (-3.9%), maize (-15.4%), and rice (-1.4%). Cotton production was recorded at 7.08 million bales, sugarcane 84.24 million tonnes, wheat 28.98 million tonnes, and rice at 9.72 million tonnes. Other crops grew by 4.78%, driven by robust performances in potato (11.5%), onion (15.9%), and mash (4.7%). Cotton ginning lost momentum, declining by 19.03% compared to the growth of 47.23% in the previous year. The livestock sector, contributing 63.60% to agriculture and 14.97% to Pakistan's GDP, grew by 4.72% in FY2025, up from 4.38% the previous year. The forestry sector recorded growth of 3.03%, maintaining a steady contribution of 2.31% to agriculture and 0.54% to GDP. The fisheries sector grew by 1.42%, improving from 0.81% last year, with a sectoral share of 1.31% in agriculture and 0.31% in GDP. External sector Per capita income reached $1,824, up from $1,662 in the previous year, showing a 9.7% increase supported by improved economic activity and a stable exchange rate. The current account recorded a $1.2 billion surplus (0.3% of GDP), while remittances grew 11% to $32 billion. Foreign reserves reached $14.3 billion, covering 3.6 months of imports. Health and education Pakistan's health sector showed modest improvements in FY2024- 25, with infant mortality declining to 52 per 1,000 live births from 56 last year, though national health expenditures remained at just 1.4% of GDP. The education sector saw literacy rates rise to 62.8%, while primary school enrollment reached 28.6 million children, yet education spending stayed at 2.1% of GDP, below regional benchmarks. Technology and infrastructure The IT sector emerged as a bright spot, with exports surging 32% to $3.5 billion and digital banking transactions growing 89% to Rs12.7 trillion, as mobile broadband penetration reached 57% of the population. Transport infrastructure expanded with road networks growing to 284,772 km and aviation passenger traffic jumping 24%, though rural connectivity gaps persist. Demographics and labor Population growth slowed slightly to 2.4%, with urban residents now comprising 40.1% of Pakistan's 241.5 million people, while labor force participation remained stagnant at 37.2%, with significant gender disparities. "Our digital transformation is accelerating, but human development needs matching investment," Finance Minister Muhammad Aurangzeb told reporters during the survey's launch. Power sector Pakistan's installed electricity generation capacity rose to 46,605 MW in FY2024–25, up 1.6% from 45,888 MW last year, according to the Economic Survey. However, this increase has deepened the burden on consumers, who pay Rs 2.5–2.8 trillion annually in capacity payments to idle power plants producing no electricity. Debt and Capital Markets Pakistan's public debt stood at Rs67.8 trillion (74.1% of GDP) by March 2025, marking a 2.3 percentage point decline from last year's 76.4% debt-to-GDP ratio. Domestic debt comprised 61% of the total at Rs41.4 trillion, while external debt accounted for Rs26.4 trillion. The capital market demonstrated robust growth with market capitalization at the Pakistan Stock Exchange surging 50% to Rs10.2 trillion, while the benchmark KSE-100 index gained 78,000 points during FY2025. Corporate bond issuance increased 38% year-on-year to Rs480 billion. Manufacturing and Mining Manufacturing output showed mixed results, with the industrial sector posting 4.77% growth driven by a recovery in manufacturing. Small-scale manufacturing and slaughtering helped offset contractions in large-scale manufacturing (LSM). The auto sector rebounded strongly with 42% production growth, while cement output declined 7.2%. The mining sector grew 2.1%, with coal production increasing 12% to 10.4 million tonnes. However, mineral exports fell 9% to $682 million due to global price fluctuations. Chromite production dropped 18% while rock salt output grew 5%. The mixed results come ahead of Tuesday's budget announcement, with observers watching for increased allocations to health and education.
