The Senate Standing Committee on Finance and Revenue convened the second consecutive session of its pre-budget consultations for the upcoming annual budget 2026-27 on Thursday, as stakeholders sought relief in taxation from the government. The consultative session was held in continuation of the committee’s ongoing engagement with stakeholders aimed at incorporating recommendations and addressing economic, taxation, trade, industrial and consumer-related concerns prior to the finalization of the Finance Bill 2026-27.
Representatives from various trade bodies, industrial associations and sectoral organizations appeared before the committee and presented detailed budgetary proposals and recommendations relating to taxation reforms, tariffs, duties, trade facilitation, industrial growth, consumer protection and export enhancement.
Key Recommendations from Various Sectors
The Pakistan Poultry Association recommended rationalization of the sales tax regime and proposed incentives for women’s participation in the corporate labour force through salary-related facilitation measures. The Pakistan Pharmaceutical Manufacturers Association (PPMA) recommended increasing the foreign exchange retention rate to 35 percent, introducing performance-based incentives, revising separately imposed sales taxes and reviewing hidden taxation. Representatives of the association stated that implementation of these measures could significantly enhance industrial activity and potentially double revenue generation.
The Pakistan Association of Large Steel Producers proposed reforms in the method of tax collection. Chairman Senator Saleem Mandiwalla observed that if all steel mills collectively agree on a proposal, the matter should be resolved as it constitutes a rational demand. He further stated that the proposal could be tested on a trial basis and is strongly recommended for incorporation in the upcoming budget.
Trade and Commerce Proposals
The Islamabad Chamber of Commerce recommended reducing withholding tax to lower transaction costs, revising penalty rates and amending definitions to ensure non-applicable entities are not unnecessarily charged. The chamber also proposed registration of thresholds and improved traceability of transactions.
The Exchange Companies Association of Pakistan informed the committee that the official dollar market rate currently stands at Rs279 while the black market rate is approximately Rs286. Representatives stated that the difference between exchange companies and the grey market ranges from Rs5 to Rs8 and recommended increasing the permissible exchange rate margin in order to compete with the illegal market. Chairman Senator Saleem Mandiwalla remarked that the proposal seeks “the best of both worlds,” adding that the matter does not directly fall under the budget domain and may be reviewed separately at a later stage. The association also requested exclusion from the one percent e-commerce charge, which the chairman asked the authorities to consider.
The Pakistan Automotive Manufacturers Association recommended removal of surcharge-related levies. Chairman Senator Saleem Mandiwalla stated that the committee has received several complaints regarding the surcharge issue and noted that a letter would be written to the Prime Minister for resolution of the matter and consideration of exemptions.
Consumer and Dairy Sector Concerns
The Consumer Association of Pakistan raised concerns over formula milk prices, informing the committee that prices are witnessing weekly increases ranging from Rs400 to as high as Rs1,500. The association recommended expansion and revision of the Third Schedule. Chairman Senator Saleem Mandiwalla sought a complete product-wise list of items that do not display printed prices, noting that the absence of price labeling has become a major consumer complaint.
The Fruit Juice Association informed the committee that the sector has witnessed a 45 percent decline in sales while the undocumented sector continues to gain market share. The association recommended reducing the Federal Excise Duty (FED) from 20 percent to 10 percent and urged that fruit juices should not be clubbed with fizzy drinks for taxation purposes. The ministry stated that the purpose of imposing FED on sugary products is not solely revenue generation but also promotion of healthier consumption habits in line with national health objectives.
Representatives of the Dairy Association informed the committee that the dairy sector is currently subjected to an 18 percent tax rate, which they described as among the highest globally. They stated that as a result, the formal dairy sector in Pakistan has shrunk to only two percent. The association informed the committee that the total revenue contribution of the dairy industry currently stands at 53 percent and argued that reducing the tax rate from 18 percent to 10 percent would ultimately increase revenue collection. Chairman Senator Saleem Mandiwalla supported the proposed reduction, terming it a fair demand.
Telecom and Construction Sector
The Telecom Association recommended reducing withholding tax from six percent to four percent and sought exemption from advance tax. Chairman Senator Saleem Mandiwalla also endorsed the recommendation for advance tax exemption. The committee further directed that equipment categories for local industry should be clearly specified and bifurcated. It also discussed reduction in duties and tariff structures on fiber optic equipment. Chairman Senator Saleem Mandiwalla directed stakeholders to hold consultations with the Engineering Development Board (EDB) for preparation of equipment specifications proposals and also discuss duty-related matters with the Pakistan Telecommunication Authority (PTA).
The Construction Association of Pakistan recommended inclusion of the sector under the minimum tax regime and sought permission for up to 40 percent cash transactions while acting as a withholding agent.
Textile and Export Sectors
The Towel Manufacturers Association of Pakistan recommended restoration of zero-rating status, rationalization of duties and taxes and revision of withholding tax rates for small and medium enterprises. The All Pakistan Textile Mills Association (APTMA) recommended removal of super tax and rationalization of withholding tax on exporters. A senior Ministry of Finance official informed the committee that discussions on these recommendations are ongoing at the highest level, particularly due to concerns raised by export-oriented sectors. The official acknowledged that exporters have complained that the existing taxation regime has negatively affected exports.
The Rice Exporters Association of Pakistan emphasized that Pakistan competes directly with India in international markets and recommended incentives for value addition to enhance export competitiveness. Representatives of the Pakistan Gems and Jewellery Traders and Exporters Association also appeared before the committee and presented sectoral recommendations. The Pakistan Ready-Made Garments Manufacturers and Exporters Association (PRGMEA) informed the committee that the industry continues to receive manual notices and undergoes up to 12 audits annually, which adversely affects business operations.
Automobile and Small Industries
The All Pakistan Motor Dealers Association recommended reduction in taxes to facilitate the automobile trade sector. The Automotive Manufacturers Association proposed introduction of a new five-year auto policy consolidated under the National Tariff Policy framework. Representatives of the Re-Rolling Mills Association highlighted discrepancies between large and small-scale industries and maintained that fixed taxation should not be imposed on the sector. Officials from the Ministry of Finance acknowledged that the primary concern relates to differing standards between small and large industries and emphasized the need for a standardized regime. Chairman Senator Saleem Mandiwalla directed that further meetings be held on the matter and stressed that small industries must also be protected and supported.
Health and Tobacco Control
The Society for the Protection of the Rights of the Child recommended an increase of Rs35 on economy-brand cigarettes as part of tobacco control measures.
General Economic Concerns
Representatives of traders associations informed the committee that businesses are currently facing a 45 percent decline in sales due to prevailing economic conditions and reduced market activity.
Following detailed consultations, the Senate Standing Committee on Finance and Revenue compiled the recommendations submitted by all participating associations and stakeholders for onward consideration by the Ministry of Finance and relevant authorities during the formulation of the Federal Budget 2026-27.
