The National Assembly Standing Committee on Finance and Revenue noted on Wednesday that the one-year pilot phase of the Retailer Tax Scheme would enable the government to assess the scheme's effectiveness and address any emerging shortcomings during implementation.
Briefing on Tax Reform Initiatives
The committee received detailed briefings from the Federal Board of Revenue (FBR) on two major tax reform initiatives: the proposed Faceless Assessment and Audit System and the Retailer Tax Scheme. The committee was informed that the Faceless Assessment and Audit System aims to eliminate physical interaction between taxpayers and tax officials, reduce discretionary powers, enhance transparency, and curb collusion opportunities. Drawing on the faceless customs model, which reportedly contributed to a significant revenue increase, the new framework seeks to modernize tax administration through digitalization and risk-based compliance management.
Components of the Faceless System
The FBR briefed the committee on three core components: the National Faceless Audit Wing, the National Assessment and Adjudication Wing, and the Field Operations Wing. The proposed model incorporates artificial intelligence-based risk management, randomized case allocation, virtual hearings, quality assurance, and enhanced accountability safeguards. Implementation will be phased, starting in October 2026 and culminating in full integration by October 2027.
Members welcomed modernization efforts but raised concerns about the need for a comprehensive cost-benefit analysis, safeguards against algorithmic manipulation and data tampering, technical preparedness of FBR personnel, accountability of faceless officers, and protection of citizens' data and privacy.
FBR Response and Retailer Tax Scheme
Responding to queries, the FBR informed the committee that multiple independent audits, including assessments by international firms, had been conducted, and robust cybersecurity arrangements were in place. The system incorporates self-learning capabilities and multiple quality control layers. The committee also received a detailed briefing on the proposed Retailer Tax Scheme, developed after extensive consultations with trader associations and business representatives. The scheme targets retailers with annual sales up to Rs 20 crore and proposes a simplified turnover-based tax mechanism. Participants would receive facilitation measures, including exemption from routine audits and certain withholding and point-of-sale requirements.
Members expressed concerns about potential under-reporting, misuse, and fairness for other sectors. The government clarified that the initiative is not an amnesty scheme but a one-year pilot to encourage documentation and expand the tax base.
Chairman's Observations
Chairman Syed Naveed Qamar observed that the faceless assessment initiative appeared to be a carefully planned reform. He emphasized independent scrutiny, transparency, accountability, and safeguards to protect taxpayers' rights. He noted that the one-year pilot phase would allow the government to assess effectiveness and address shortcomings. He stressed that tax reforms must facilitate compliance while protecting taxpayers from harassment, and success depends on effective and transparent implementation.
The committee decided to continue deliberations at its next sitting on 18th June 2026. It also approved the minutes of the previous meeting held on 16th June 2026.
Attendees
The meeting was attended by Rana Iradat Sharif Khan, Ali Zahid, Bilal Farooq Tarar, Muhammad Usman Awaisi, Ms Zeb Jaffar, Dr Nafisa Shah, Ms Hina Rabbani Khar, Dr Sharmila Faruqui, Dr Mirza Ikhtiar Baig, Muhammad Javed Hanif Khan, Arshad Abdullah Vohra, and Ms Shahida Begum, MNAs. The Minister for Finance, Minister of State for Finance, Secretary Finance, Chairman FBR, DG Tax Policy, and senior officers from the Finance and Revenue divisions also attended.
Senate Committee Review
Meanwhile, the Senate Standing Committee on Finance and Revenue, chaired by Senator Saleem Mandviwala, concluded its extensive review of the Finance Bill 2026-27 and the Annual Budget Statement for Fiscal Year 2026-27, laid before Parliament under Article 73 of the Constitution. Over five consecutive sessions, the committee undertook a detailed clause-by-clause scrutiny of the Finance Bill, examining proposed amendments to the Customs Act 1969, Sales Tax Act 1990, and Income Tax Ordinance 2001, alongside broader fiscal, trade, industrial, revenue, and economic reform measures.
Deliberations were attended by Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb, Minister of State for Finance Bilal Azhar Kayani, committee members, senior FBR officials, ministry representatives, industry stakeholders, business organizations, and sectoral experts.
The committee reviewed budgetary proposals affecting taxation, customs administration, digitalization, industrial competitiveness, exports, investment promotion, economic documentation, tariff reforms, and revenue generation. It engaged extensively with government institutions and stakeholders to ensure fiscal measures remain balanced, transparent, growth-oriented, and aligned with national economic priorities.
Members emphasized policy consistency, predictability, evidence-based decision-making, and broad stakeholder consultation to strengthen economic confidence and support sustainable growth.
The committee examined and made recommendations on reforms including customs clearance improvements, taxpayer facilitation, digital tax administration, tax base expansion, economic documentation, export support, industrial growth, and regulatory efficiency. Special attention was given to reducing procedural delays, improving transparency, encouraging investment, facilitating legitimate businesses, and strengthening revenue administration through technology.
The committee also reviewed trade facilitation, tariff rationalization, social and economic sectors, emerging digital businesses, financial services, and public welfare considerations. After comprehensive deliberations, it finalized and approved recommendations on the Finance Bill 2026-27 for submission to the Senate, reflecting commitment to strengthening parliamentary oversight, improving fiscal governance, supporting economic stability, and contributing to a sustainable and inclusive national budget.
