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Business Recorder
19 hours ago
- Business
- Business Recorder
Finance Bill 2025–26: Salaried class demands substantial relief
KARACHI: With deep concern and in the spirit of national responsibility, representatives of Pakistan's salaried class have raised alarm over the proposed measures in the Finance Bill 2025–26, which they believe continue to unfairly burden the most compliant segment of taxpayers. Over the past six years, the salaried class has seen its tax contribution rise from Rs 76.44 billion in FY19 to a projected over Rs 550 billion in FY25, an increase of nearly 719 percent. However, this surge does not reflect income growth, but rather the impact of inflation, lack of indexation, and withdrawal of essential tax credits on education, insurance, and investments. Addressing a press conference at Karachi Press Club (KPC) on Thursday, Addel Ahmed and Eisha Fazal of Salaried Class Alliance Pakistan said that the salaried segment, whose taxes are deducted at source and who remain fully documented, continues to face punitive policies including exorbitant tax on pension funds, particularly penalizing retirees with modest non-pension income; increase in tax on mutual fund and bank profits, discouraging regulated savings and long-term investment and continued 10 percent surcharge on high-earning individuals, while informal and undocumented sectors remain largely untouched. They said that despite public promises of relief, the current proposals fall short. They demanded meaningful relief in Finance Bill for FY26 and urged for raise the tax-free salary slab to Rs 100,000 per month, adjusting for inflation. In addition, they demanded restoration of earlier slab rates, including a reduction of the top slab from 35 percent to 32.5 percent and 30 percent to 27.5 percent second last slab and keeping the tax rate for lowest slab at 1 percent as per budget speech. 'Government must also reinstate tax credits for insurance, education, and investments and withdraw the 10 percent surcharge and ensure uniform treatment of all taxpayers,' they added. They urged the government to widen the tax net, targeting the largely untaxed wholesale, retail, and agricultural sectors. They said that the 2.5 percent slab rate reduction and minimal surcharge cut are noted, they are far from sufficient. The salaried class is not asking for favors but only fairness, they added. Salaried Class Alliance urged the policymakers to show compassion and take corrective action before finalizing the Finance Bill. A just tax policy is essential to restore public trust, prevent brain drain, and secure Pakistan's economic stability, they believed. Copyright Business Recorder, 2025
Business Recorder
19 hours ago
- Business
- Business Recorder
Petroleum products: Senate body rejects Rs2.50/litre carbon levy
ISLAMABAD: The Senate Standing Committee on Finance and Revenue with majority vote rejected the carbon levy of Rs2.5 per litre on petroleum products proposed in the Finance Bill 2025-26, from which the government has projected to generate a revenue of Rs45 billion. Under the ongoing International Monetary Fund (IMF) programme for Resilience and Sustainability Financing (RSF), the government has agreed for the imposition of the carbon levy on petrol, diesel and furnace oil of Rs5 per litre, which will be phased in over two years. The Federal Board of Revenue (FBR) chairman said that revenue from carbon levy would be increased to Rs90 billion in 2026-27. The levy is a condition of the IMF's RSF programme of $ 1.4 billion. This levy will be imposed on petrol, diesel and furnace oil. Aurangzeb tells Senate body: Govt eyes $2bn loan to boost reserves The parliamentary panel chaired by Senator Saleem Mandviwalla, observed that carbon levy could not implemented through finance bill. The committee observed that the way carbon levy is going to be impose was not correct and rather it should come as carbon tax. The committee also underlined that Petroleum Division has proposed Rs2.5 carbon levy without providing sustainable 'Emission Reduction' plan for the environment. Senator Sherry Rehman opposing the levy said that there is difference between the carbon levy and carbon tax. 'There is no place in the world where carbon levy been imposed but carbon tax used to be enforced'. Sherry Rehman said that carbon taxes been enforced over specific industries with an aim. 'You are imposing all types of levies and that also directly over the public users,' she added. 'It requires an act of law and not enforced with the finance bill,' she added. Senator Mohsin Aziz said that the Supreme Court has restrained imposition of carbon levy in Zafar Iqbal Jhagra case. 'It will be contempt of the court if carbon levy is imposed', he added. After debate the carbon levy was rejected by the government with majority vote. The FBR chairman said that tax on hybrid vehicles is not being increased. The committee also raised questions on the proposed amendment in regulation of Generation, Transmission and Distribution of Electric Power Act 1997 agreed with IMF. According to the proposed amendment, the Debt Service Surcharge (DSS) is currently set at 10 percent of the NEPRA-determined revenue requirement, adjusted each year at the time of annual rebasing, per current practice. In the event that DSS revenues fall short of the annual payment requirement, the DSS will be increased to make up for the shortfall and calibrated per any anticipated future shortfalls in the succeeding year. To facilitate this, NEPRA has proposed to adopt legislation to remove the 10 percent. Discussing the power sector initiative for payment of circular debt through refinancing, NEPRA officials stated that, as of now, Rs3.23 per unit is being charged to consumers. However, NEPRA proposed removal of 10 percent cap limit, as it would help in obtaining necessary refinancing needed for the payment of power sector's circular debt. However, the committee objected while saying that authorities concerned wanted blanket power to increase DSS, which would result in power tariff increase for consumers. The committee decided to call minister and secretary for power to brief the committee. Chairman committee said that they need a briefing on the circular debt repayment plan. If permission is given, you will increase this rate with proposed blanket power and if there is no need to increase it, then why is permission being sought, he asked. The joint secretary took the stand that this will not happen and consumers will continue to be charged Rs3.23 per unit. Senator Sherry Rehman opposed it and said that this cannot be allowed. The joint secretary said that there is a 10 percent service surcharge limit and IMF has demanded that the limit on debt service surcharge be removed. The government will use the surcharge to pay off a debt of Rs1,275 billion. The surcharge is used to pay interest on the circular debt. Currently, a debt service surcharge of Rs3.23 per unit is being charged from consumers, he added. Senator Shibli Faraz said that if the levy money is being spent on roads, what would happen to combating climate change. The prime minister says that the funds will be spent on the roads of Balochistan. The government should first determine its priorities, he added. The committee took exception to certain clauses of 'Public Finance Management Act' allowing autonomous bodies to retain money and submit surplus profit into Public account. The committee called for rationalisation of these clauses, as it would only result in financial irregularities. The committee was briefed on the exemptions provided to businesses located in Khyber Pakhtunkhwa and newly-merged districts. It was informed that the exemptions for cinema operators have been limited to 2030, granting five years exemptions from the date of operations. However, the FBR has extended the withholding exemption for businesses existing in erstwhile FATA till 2026. Highlighting the significance of newly introduced 'Digital Presence Proceeds Act', the FBR chairman stated that the tax has been imposed on digital platforms providing services within the country without retaining physical footprint. The FBR chairman said that a sunset clauses for SEZs and STZs are included in the finance bill. He said that IMF was stressing to limit this tax exemptions for SEZs and STZs to 2027, however after hectic efforts the deadline was extended to 2035. The committee recommended the proposal. The committee also gave its nod to the budgetary proposals of tax on pension income exceeding Rs10 million for individuals under the age of 70. The committee recommended a proposal of the Federation of All Pakistan Universities Academic Staff Associations (FAPUASA) for continuation of 25 percent tax rebate. FAPUASA representatives strongly asserted that this rebate is an essential incentive to retain top academic talent, attract young scholars to the profession, and prevent brain drain from Pakistan's universities. Removing this rebate, they argued, would undermine academic motivation and weaken the research capacity of the country. Copyright Business Recorder, 2025
Business Recorder
19 hours ago
- Business
- Business Recorder
FBR chief urges Senate body to abolish 7th Schedule of ITO, bring banks into normal tax regime applicable to companies
ISLAMABAD: Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial, Thursday, strongly recommended Senate Standing Committee on Finance to abolish Seventh Schedule (Banking Schedule) of the Income Tax Ordinance 2001 and bring banks into normal tax regime applicable to companies. The FBR chairman expressed serious concern over special tax treatment to the banking companies. 'Banking Schedule must be abolished from the income tax law', Rashid Mahmood said. He stated that the banks should be treated like any other company. 'Why the banks be given totally different tax treatment as compared to other registered companies', the FBR chairman questioned. 'Tax laws cannot be dictated to the government by any particular sector', the FBR chairman criticised. In 2007, this schedule was inserted in the Income Tax Ordinance 2001, which needs to be deleted, the FBR chairman said. Langrial stated that the banks are engaged in business and why we are applying different tax laws on banks. Seventh Schedule (Banking Schedule) of the Income Tax Ordinance should not remain part of the tax law and it should be abolished from the Income Tax Ordinance. Banks should not be given different tax treatment, the FBR chairman said. While review of the Finance Bill (2025-26) on Thursday, the taxation issue of banking sector was discussed in detail at the Senate Standing Committee on Finance and Revenue, under the chairmanship of Senator Saleem Mandviwalla. FBR Member Inland Revenue (Operations) Hamid Atiq Sarver was specially invited to explain banking related amendments in the Finance Bill (2025-26). When Mandviwalla asked the Securities and Exchange Commission of Pakistan (SECP) chairman about the legal status of banks, Akif Saeed informed the committee that the banks are registered like any other company. The FBR Member Inland Revenue (Operations) explained in detail all legal and technical amendments relating to the banking schedule of the Income Tax Ordinance 2001. Later, amendments were approved by the committee. Chairman of the committee Saleem Mandviwalla questioned the performance of the anomaly committees constituted by the FBR. The FBR has formed two anomaly committees to identify and remove the technical and legal anomalies in the Finance Bill 2025. Mandviwalla stated that the anomaly committees have failed to address the issues raised by the business community. The anomaly committees do not rectify errors in tax laws. The FBR chairman responded that this year we are bound due to IMF programme. The chairman of the committee also recommended deletion of Special Economic Zone (SEZ) Act, keeping in view government policy for not granting or extending tax exemptions. Some SEZs are fully operational and some are partially working. What is the fate of the SEZ after withdrawal of tax exemptions, he raised question. The government should terminate SEZ Act as it has become redundant in the absence of new tax exemptions. The FBR is not giving new exemptions and it would create problems for the new SEZs. Therefore, the law should be abolished. The government should refrain from giving fresh approvals to the SEZs, he added. On the proposal of the FBR for three years limit on audit of a taxpayer, Mandviwalla noted with concern that it is a general practice of the FBR to conduct multiple audits of taxpayers even in cases where simple explanation is required. A school of Islamabad has been audited by the FBR for the last three years, he added. Copyright Business Recorder, 2025
Express Tribune
21 hours ago
- Business
- Express Tribune
MPs break ground with budget review
Listen to article Former energy and finance minister Naveed Qamar said Parliament has made history by reviewing the 2025-26 budget word by word through its standing committees on finance and revenue. Speaking at a parliamentary consultation titled 'Budget 2025-26: Numbers and Beyond' on Thursday, Qamar noted that for a hundred years, the budget-making process remained the sole domain of bureaucrats. "Parliamentarians were handed the budget as a fait accompli, only to rubber-stamp it. This time, we've amended the rules of parliamentary business, allowing committees from both houses to read the Finance Bill meticulously, calling in experts and officials to better understand the data and narrative," he said. He stressed that Parliament must take the lead in the budget process and proposed setting up a parliamentary budget office staffed by specialists. "The budget documents reach Parliament in June with only weeks to pass them. The process should start months earlier with expert input," he added. Dr Nafisa Shah and Sher Ali Arbab, co-conveners of the Parliamentary Forum on Energy and Economy, explained how the forum works across party lines to broaden public engagement and deepen debate on energy and economic policies. Former State Bank governor Shahid Kardar criticised the budget as "unimaginative" and repetitive. "It doesn't address how government operates. Both federal and provincial governments are expanding without improving performance. Salaries and pensions are rising while development projects face major delays and cost overruns," he said. He also criticised international donors like the IMF for continuing to lend without requiring real structural reforms.
Express Tribune
a day ago
- Business
- Express Tribune
FBR to block bank accounts, cut utilities for unregistered businesses
Listen to article In a bid to expand the tax base, the federal government has proposed tough new measures under the Finance Bill, seeking to restrict unregistered businesses from operating bank accounts and to disconnect their electricity and gas connections, Express News reported on Thursday. The National Assembly's Standing Committee on Finance on Thursday granted conditional approval to the move, directing the inclusion of procedural safeguards. During a meeting of the committee chaired by MNA Syed Naveed Qamar, Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial briefed lawmakers on the proposed amendments. He stated that businesses not registered for sales tax would no longer be allowed to operate bank accounts. Notices would be issued prior to any such action, and accounts would be reactivated within two days of registration. Read More: Govt slaps Rs415b taxes to raise Rs2.2tr Langrial further informed the committee that non-registered Tier-1 retailers would face disconnection of power and gas utilities while revealing that of the 300,000 industrial units operating in Pakistan, only 30,000 to 35,000 were currently registered with the FBR. 'Tax rates are admittedly high, and compliance remains low,' he said. 'Electricity theft alone costs the national exchequer Rs500 to Rs600 billion annually.' Responding to a question on how unregistered businesses would be identified, the FBR chairman said income tax filings and business volume would be used to assess eligibility for sales tax registration. The committee was also told that a significant number of businesses, even among those registered, underreport sales and production. 'One-third of manufacturers are not even registered,' Langrial said. 'Those that are often engage in under-filing.' Committee member Javed Hanif expressed support for the FBR's proposals under Sections 14A(C) and 14A(D) of the Sales Tax Act. However, Chairperson Qamar cautioned that any new law should not be applied in a manner that could unjustly penalise unintended parties. Also Read: Govt to raise tax evasion fines to Rs5m for shopkeepers Finance Minister Muhammad Aurangzeb, also present at the meeting, said the government had no plans to offer further tax amnesties or exemptions. 'That era is behind us,' he remarked. 'Our focus is to bring more people into the tax net and to improve thresholds and procedures.' The committee advised the FBR to include clear safeguards before proceeding with temporary account deactivations. The board was also asked to present a revised draft incorporating those protections. Langrial acknowledged that many business models are based on tax evasion and sought permission to temporarily suspend bank accounts rather than permanently freeze them. He suggested that any decision on permanent closures should rest with a designated committee. The proposed crackdown is part of a broader reform package aimed at increasing tax compliance in line with Pakistan's commitments under its programme with the International Monetary Fund (IMF).
