The Senate Standing Committee on Finance and Revenue has approved the Federal Board of Revenue's (FBR) new framework empowering it to conduct re-audits of business records, along with sales tax exemptions for the import of bulletproof vehicles required for the Shanghai Cooperation Organisation (SCO) Summit and counter-terrorism operations. The committee continued its detailed review of the Finance Bill 2026-27 during its second consecutive sitting, chaired by Senator Saleem Mandviwala.
Re-audit Framework Approved
The committee undertook a comprehensive review of the sales tax-related provisions of the Finance Bill and examined proposals aimed at broadening the tax base, improving compliance mechanisms, and increasing government revenues. One of the major decisions taken during the meeting was the approval of a new framework empowering the FBR to conduct re-audits of business records under specified circumstances. Under the approved proposal, a commissioner will be authorised to order a re-audit in cases where irregularities are suspected, subject to prior approval from the chief commissioner. The registered person will be provided a full opportunity to present their position before any order is finalised.
The committee also approved provisions allowing the revaluation of inventory held by registered persons. The revised valuation of stock will be determined by a cost accountant, while inventory re-audits will be conducted only by accountants selected from an approved FBR panel. Commissioners will additionally be authorised to seek answers to specific questions from taxpayers during proceedings.
National Faceless Centre Approved
The committee held an extensive discussion on FBR's proposal to establish a National Faceless Centre and introduce a faceless audit and assessment system. According to FBR officials, taxpayer cases will be assigned through automated algorithms, audits and assessments will be conducted electronically, and direct interaction between tax officers and taxpayers will be significantly reduced. FBR Member Ahmed Atiq Sarwar informed the committee that the proposed system seeks to separate audit functions from assessment functions and minimise opportunities for corruption. He stated that all tax transactions are proposed to be conducted electronically and that the identity of officers operating within the faceless system would remain confidential.
Senator Sherry Rehman expressed concerns regarding the practical implementation of the proposal, particularly in view of connectivity challenges. Senator Talha Mahmood questioned the transition from conventional enforcement mechanisms, asking, “What did we do before the automated system?”
Finance Minister Muhammad Aurangzeb informed the committee that the government's objective was to reduce excessive human intervention while maintaining effective oversight. The finance minister further stated, “Our effort is to minimise human intervention,” while emphasising that powers were being restructured to improve efficiency and transparency. Senator Saleem Mandviwala questioned the effectiveness of faceless operations where field enforcement remained necessary.
Following detailed deliberations, the Senate Standing Committee approved the proposal for the establishment of the National Faceless Centre.
Strict Enforcement Measures Against Fake Invoicing
The committee also approved a series of stringent enforcement measures aimed at integrating businesses into the digital tax system and combating fake invoicing. Under the approved proposals, businesses that fail to integrate with the digital system within the prescribed period may face fines, repeated violations may attract additional penalties, and may result in the sealing of business premises.
The committee approved strict action against fake and fictitious tax invoices. Persons issuing fake invoices may be fined an amount equivalent to the full value of the invoice. A public list of fake invoice issuers may also be published, while tax credits obtained through fictitious invoices will be automatically cancelled. Additional measures include a 20 per cent penalty where discrepancies are detected between input tax and output tax, along with surcharges and further penalties for incorrect input tax claims. The committee approved the proposed framework for penalties and enforcement against fake invoices.
Amendments on Seized Goods and PIA Concessions
Another significant amendment approved by the committee related to the disposal of seized goods. The committee recommended that vehicles transporting seized goods should not automatically be confiscated. The committee also approved amendments relating to the auction of seized goods. Under the revised framework, e-auctions will be permitted.
The committee reviewed a proposal granting customs and tax concessions for the import and lease of aircraft, spare parts, and operational equipment for Pakistan International Airlines (PIA). Officials informed members that the concessions were intended to support operational and maintenance requirements, with customs authorities monitoring quantities and utilisation. During the discussion, the committee proposed broadening the facility to all airlines. The committee agreed with the recommendation and amended the proposal to extend the exemption framework beyond PIA to all eligible airlines.
Tax Exemptions for Bulletproof Vehicles for SCO Summit
The committee also approved sales tax exemptions for the import of bulletproof vehicles required for the SCO Summit and for counter-terrorism operations. Under the approved mechanism, import of such vehicles will require clearance from both the Ministry of Foreign Affairs and the Ministry of Interior. The committee introduced amendments to impose limits on the number of vehicles that may be imported, while authorising the Ministry of Interior to determine operational requirements for counter-terrorism purposes.
12% Tax on Retail-packed Products
Lastly, retail-packed products will be taxed at 12 per cent, which may lead to higher prices for various packaged food and beverage items. The changes will also apply to products such as infant formula, edible oils, confectionery items, agricultural medicines, pesticides, branded footwear, and clothing. According to authorities, the objective is to broaden the tax base, improve economic documentation, and enhance revenue collection.
Proceedings were temporarily adjourned earlier in the day due to the absence of the finance minister and minister of state. The session resumed upon the arrival of Finance Minister Muhammad Aurangzeb. The Senate Standing Committee on Finance and Revenue will continue its scrutiny of the Finance Bill 2026-27 and budgetary proposals in Parliament House.
The meeting was attended by Finance Minister Muhammad Aurangzeb, Minister of State for Finance Bilal Azhar Kayani, Senators Sherry Rehman, Senator Talha Mahmood, and Senator Shahzaib Durrani, senior officials of the Federal Board of Revenue (FBR), the Finance Division, and other relevant departments.
