Latest news with #FBR
Business Recorder
an hour ago
- Business
- Business Recorder
Budget FY25-26: Finance bill still being discussed, says FBR
The Federal Board of Revenue (FBR) on Friday said the Finance Bill 2025 was still being discussed in the National Assembly (NA) and among various business circles. The FBR's statement comes as 'a number of news stories in the digital and print media give the impression that some of the amendments introduced in the finance bill are not understood well by the public at large', the tax body said. 'For instance, the legal provisions for the arrest of those involved in a tax fraud have already been provided under Section 37A of the Sales Tax Act, 1990 along with an elaborate procedure to be followed after the arrest which involves intimating the Special Judge immediately and the production of such person before Special Judge within 24 hours. 'However, the proposed amendment now restricts the powers of the officer to arrest by making prior inquiry after approval of the Commissioner Inland Revenue (CIR). Only on the basis of the findings of the inquiry CIR will authorise the investigation which would give the investigation officer the powers of an officer in charge of a police station under Code of Criminal Procedure, 1898 (Act V of 1898),' the FBR said. Key highlights of Pakistan budget for 2025-26 The arrest could only be made with the prior approval of CIR if the investigation officer had reasons to believe that a tax fraud might have been committed by a person, the statement added. According to the tax body, the new legal provision further provides that if the arrest is mala fide the matter will be referred to the Chief Commissioner for fact finding inquiry. 'This shows that in contrast to the earlier provision where an Assistant CIR could arrest an offender, the new provisions bring transparency in the process by a mandatory prior inquiry and investigation and finally permission by the CIR. 'Moreover, certain changes and amendments are also necessary to reassure the compliant taxpayers that those evading taxes or involved in tax fraud are dealt with by the state with an iron hand.' FBR chairman Rashid Mahmood Langrial has expressed his willingness to discuss the recent changes made in the tax laws and introduce changes wherever needed, for example, the provisions related to arrest could be revised to mandate the permission of multiple senior officers before any arrest. 'Furthermore, in order to ensure that these powers are not misused by the authorised tax officers against the compliant taxpayers and business community, the Honorable Prime Minister Shehbaz Sharif has formed a high powered committee, which will be headed by Minister for Finance and Revenue, to re-evaluate the proposed amendments and suggest adequate safeguards to prevent potential misuse of powers.' Budget 2025-26: Pakistan targets 4.2% growth as Aurangzeb presents proposals 'for a competitive economy' The other members of the committee will include Ministers of Law and Economic Affairs Division, Minister of State for Finance, SAPM Industries and Chairman FBR, as per the statement. 'The committee will also examine various options to ensure that legal economic activities are not stifled and propose additional protective measures against unlawful use of authority. The committee will submit its recommendations to the Honorable Prime Minister in three days.' **
Express Tribune
15 hours ago
- Business
- Express Tribune
NA panel reviews FBR powers
The National Assembly Standing Committee on Finance on Thursday directed the Federal Board of Revenue (FBR) to incorporate safeguards before closing bank accounts of unregistered businesses, amid widespread tax evasion and underreporting by businesspeople. The committee, which met here with its chairman Syed Naveed Qamar in the chair, reviewed the FBR's proposed measures to enforce sales tax compliance, including the disconnection of utilities and temporary freezing of bank accounts for non-filers. During the meeting, FBR Chairman Rashid Mahmood Langrial gave a briefing to the committee. He said that unregistered businessmen would not be able to operate a bank account under sales tax laws, adding that such a person would be served a notice prior to the closure of the bank account. "The bank account of an unregistered person will be reactivated within two days after registration," he said. He revealed that out of 300,000 industrial units in Pakistan, only 30,000 to 35,000 were registered with the authorities. Explaining reasons, he acknowledged that the tax rate in Pakistan was high. "One-third of manufacturers are not registered in sales tax. People who even come under the tax net do not file returns," Langrial said. "Those who pay taxes underreport their incomes," he told the committee. "Electricity theft alone costs Rs500 to 600 billion every year." When asked how the FBR would identify businesses not paying sales tax, the FBR chairman explained that the income declared for income tax purposes would be used to estimate the volume of sales, supplies and overall business activity. Action would then be taken against individuals who fail to register, he added. Committee member Javed Hanif supported the FBR's proposals but the committee chair cautioned against enacting a law aimed at catching tax evaders if it also adversely affects compliant businesses. Another Committee member, Sharmila Farooqi, suggested that instead of making the penalties more stringent, the taxpayers should be given incentives. "Reduce the tax rate. It will broaden the tax net and encourage the people to get them registered. Finance Minister Muhammad Aurangzeb replied that the tax threshold and process would be improved. however, he made it clear that tax exemptions and amnesties would not be given anymore. "The time for tax exemptions and amnesties has passed. People have to be brought into the tax net." Langrial urged the committee to allow the FBR to temporarily deactivate the bank account of unregistered businessmen. The committee, however, directed for including safeguards in the process. Petroleum levy Meanwhile, the committee approved a proposal to increase the rate of petroleum development levy (PDL) to Rs90 and impose carbon levy on petrol, diesel and furnace oil. Finance Ministry officials told the committee that there was a proposal to impose the PDL on furnace oil as well. The officials said Rs100 billion in revenue was expected from the PDL on furnace oil. They added that 1.2 million tons of furnace oil was imported for 1,000MW Independent Power Producers (IPPs). The Power Ministry secretary said that the target of PDL recovery in fiscal 2025-26 was set at Rs1,468 billion. The Finance Ministry officials said that the government expected Rs45 billion in revenue through the carbon levy. The committee chair asked how much amount the Centre would get if the levy was turned into a carbon tax. On that the officials said that the amount in that case would be Rs18 billion. The committee was informed that the entire amount of a levy went to the federal government, but in taxes, provinces also get share. The chair stressed that the committee was not taking any decision regarding a levy or a tax on petroleum products. The industries secretary told the committee that Rs10 billion from carbon levy would be spent of the promotion of electric vehicles. He added that 30% of the vehicles would be shifted to electric vehicles by 2030. The production of all types of vehicles in the country is around 150,000, the officials said, adding that there were 76,000 electric vehicles in the country at present. "In the next five years, the production of electric vehicles will be increased to 2.2 million," the secretary said.
Business Recorder
16 hours ago
- Business
- Business Recorder
PPA opposes ‘draconian powers' to tax officials
ISLAMABAD: Pakistan Poultry Association (PPA) has expressed serious concern that tax authorities are being given dangerous and draconian powers which may be misused to harass the formal tax paying sector. According to a communication of PPA to top policy makers and budget makers on Thursday, Finance Bill 2025-26 proposed to grant to the Federal Board of Revenue (FBR) officers dangerous and excessive powers: (i) Section 11E enables tax assessment and recovery based on suspicion without proper investigation. (ii) Section 14AE allows arbitrary seizure of business premises and property without adequate safeguards. (iii) Section 32B empowers private auditors with quasi-legal authority over businesses. (iv) Section 33 introduces 10-year prison terms and Rs10 million fines for broadly defined 'tax fraud' that business errors are likely to be classified. (v) Section 37AA authorizes arrest without warrant based on mere suspicion of tax fraud- a power that invites abuse and harassment. (vi) Section 37B permits 14-day detention of businesspersons, extendable through magistrates. (vii) Overriding the principle of client/advisor relationship, Section 58C will grant the FBR access to the offices of tax advisers and firms where discrepancies in returns are suspected. Even criminals are given ample opportunity to be heard and no criminal is arrested without warrant. The Federation must not just make verbal criticism; they should call the formal sector, which contributes more than 60% to the GDP, to close down their offices until the proposed powers are undertaken/set aside/withdrawn, PPA added. Copyright Business Recorder, 2025
Business Recorder
17 hours ago
- Business
- Business Recorder
KPK budget FY26
EDITORIAL: Khyber Pakhtunkhwa (KPK) unveiled a 2119 billion-rupee budget outlay for next fiscal year with a projected surplus of 157 billion rupees — an amount that is lower by 15.8 billion rupees from what was budgeted by the federal government as its share in the 1217 billion-rupees provincial surplus (based on 14.62 percent KPK's share in the divisible pool). Given that the Sindh government budgeted a deficit of 38 billion rupees, instead of a surplus of 298 billion rupees budgeted by the federal government, a critical partner in propping up the PML-N government at the Centre, the KPK government's surplus must have come as a pleasant surprise for the Centre. In this context, it is relevant to note that the Sindh government has cited major risks associated with federal transfers pledged in the budget given that it is a usual occurrence for the federal budget to present unrealistic tax targets (in the current year the shortfall is projected at one trillion rupees). However, the KPK budget formulators took the innovative and more appropriate measure to release a document titled 'Fiscal Risk Statement', which itemised a range of issues that would impact on the revenue and expenditure side of the budget, a list that includes: (i) general economic risks associated with geopolitical tensions, including with neighbouring countries, which present the possibility of potential disruptions in trade and investment flows, posing threats to economic stability and growth; (ii) specific fiscal risks associated with lower tax collections by the FBR than budgeted, leading to lower than budgeted total transfers to KPK which, in turn, was at a variance of negative 4 percent in two years — 2021-22 and 2022-23 — and which widened to negative 19 percent in 2023-24 and registered negative 8.79 percent in 2024-25; and (iii) structural or institutional risks. KPK's outstanding debt portfolio increased by 6.41 percent due to an increase in net receipts (disbursements less principal repayments) and decrease in foreign currency exchange rate from 285 to 280 which had a weighted average impact of -1.75 percent. However, it was rightly flagged that a portion of the province's foreign debt portfolio remains linked to variable international benchmarks such as the Secured Overnight Financing Rate (SOFR), Japanese Yen Tokyo Overnight Average Rate (TONA), and the Euro Interbank Offered Rate (EURIBOR). While recent trends indicate a slowdown or pause in global rate hikes, any future tightening by major central banks could increase the cost of debt servicing. Two further observations on the budget are in order. First, tax on agriculture income is budgeted at 130 billion rupees next fiscal year, the same amount that was generated in the revised estimates of 2024-25 (against the budgeted amount of 114 billion rupees in the outgoing fiscal year), which makes one wonder what is the expected implementation of the legislated tax on the income of farmers, as per the International Monetary Fund's condition, to be implemented from 1 July 2025 with the effectivity pre-dated to 1 January 2025. And secondly, Pakistan Tehreek-e-Insaf's flagship project, Insaaf Sehat Card plus programme, is budgeted to receive 41 billion rupees next fiscal year and coverage list of medical conditions has been expanded to include liver, kidney, bone marrow and cochlear transplants/implants and related issues. Preparing a medium-term strategy paper, as required by the multilaterals, does not add real value to the federal budget as it itemises a wish-list of the future with, if past precedents are anything to go by, little likelihood of being taken seriously by the economic team leaders. However, one would recommend to the federal government (as well as all other provinces) to prepare a fiscal risk statement each year that would go a long way in adequately responding to routine challenges to budgeted revenue and expenditure claims that sadly are routinely violated. Copyright Business Recorder, 2025
Business Recorder
17 hours ago
- Business
- Business Recorder
Servants (Amendment) Bill 2025 passed in Senate
ISLAMABAD: The Upper House of the Parliament has passed the Civil Servants (Amendment) Bill 2025, which provides that the financial assets of gazetted officers and those of their spouses and dependent children, to be filed with the Federal Board of Revenue (FBR), shall be publicly available. Already passed by the National Assembly, the bill now seeks the final yet ceremonial assent of President Asif Ali Zardari to become a law. Law Minister Azam Tarar presented the bill in the Senate session, presided over by Chairman Yousaf Raza Gilani on Thursday, following its passage by the standing committee concerned, earlier this month. The Civil Servants (Amendment) Bill, 2025 seeks to amend the Civil Servants Act, 1973 with the insertion of new Section 15-A. This section provides that the declaration of assets of civil servants of basic scale (BS) 17 and above, their spouses and dependent children, including domestic and foreign assets and liabilities (if any), shall be digitally filed with the FBR, and same shall be publicly available— 'Provided that the extent of disclosure, under this section, shall give due regard to the balance between public interest for good governance and individual privacy and security.' The Statement of Objects and Reasons of the bill reads: To further operationalise the Government Servants (Conduct) Rules, 1964— and consistent with the Right to Information Act of 2017, to 'ensure that asset declarations of high-level public officials (BPS 17 - 22) (Including domestic and foreign assets beneficially owned by them or a member of their family) will be digitally filed and publicly accessible (with sufficient safeguards over data protection and privacy of personal information such as ID numbers, residential addresses, bank account or bond numbers) through the FBR with a robust framework, resources and tools for the Establishment Division to conduct risk-based verification.' Speaking on the floor of the House, Tarar, the Law Minister, said, the civil servants of BS-17 to 22 would have to declare their assets and those of their spouses and dependent children 'just like politicians declare their assets and those of their family members.' New bills; Legal Practitioners and Bar Councils (Amendment) Bill, 2025, and Criminal Laws (Amendment) Bill, 2025, were moved in the House and referred to the relevant standing committees. Meanwhile, the Senate continued discussion on the proposed federal budget for the upcoming financial year 2025-26. Speaking on the occasion, Husna Bano from Pakistan Peoples Party (PPP) demanded complete withdrawal of taxes on solar panels. Another PPP Senator Aslam Abro demanded withdrawal of proposed carbon levy on vehicles. Different senators from other political parties also shared their views on the proposed federal budget. The Senate was adjourned till today (Friday). Copyright Business Recorder, 2025
