The National Assembly Standing Committee on Finance and Revenue has expressed serious concerns regarding the potential revenue implications of proposed concessions in the budget and the adequacy of efforts to broaden the tax base. The committee, chaired by Syed Naveed Qamar, met at Parliament House to deliberate on these issues.
Committee Demands Clarity on Revenue Losses
Chairman Syed Naveed Qamar sought clarity on whether anticipated revenue losses had been adequately quantified. He requested details of the government's strategy to offset any resulting fiscal shortfall. The committee received a comprehensive briefing from the minister of state for finance and senior officials of the Federal Board of Revenue (FBR) on proposed tax measures, fiscal reforms, and revenue initiatives in the federal budget FY2026–27.
Relief for Salaried Individuals and Property Tax
The committee deliberated on relief for salaried individuals amid persistent inflation and rising living costs. Members sought clarification on whether proposed tax slab revisions would provide meaningful relief to middle-income groups. Concerns were also expressed regarding property tax reductions, incentives for the IT sector, and whether these measures would promote genuine investment, export growth, and economic sustainability rather than speculative activity.
Concerns Over Faceless Audit and AI Framework
While appreciating efforts to modernize tax administration, members raised concerns about safeguards for taxpayer rights, transparency, due process, and data privacy under the proposed faceless audit and AI-driven assessment framework.
Chairman's Directives
The chairman observed that tax relief measures must remain equitable and economically justified. He stressed the need to broaden the tax base and improve compliance. He directed the ministry of finance and FBR to submit detailed revenue estimates, fiscal impact assessments, and implementation plans before further consideration of the Finance Bill, 2026.
Key Relief Measures
The committee was informed that the budget package comprises eleven relief measures, ten rationalization measures, and five administrative reforms aimed at promoting economic growth, encouraging investment, enhancing documentation of the economy, improving tax compliance, and strengthening revenue collection. Key relief measures include:
- Reduction of exporters' minimum tax from 2% to 1.25%
- Continuation of the Final Tax Regime for IT exporters
- Relief for salaried individuals through revised tax slabs and abolition of surcharge
- Reduction in withholding taxes on property transactions
- Rationalization of Federal Excise Duty on international air travel
- Reduction in super tax rates for certain categories of corporate taxpayers
Additional relief includes abolition of taxes on contraceptives and selected women-related products, withdrawal of Capital Value Tax on foreign assets, exemption of sales tax for the shipping industry, and tax incentives for modernization of brownfield refineries.
Rationalization Measures
The committee was briefed on rationalization measures, including:
- Expansion of the Third Schedule
- Introduction of a fixed tax regime for small retailers
- Revision of tax treatment of coupon-washing transactions
- Elimination of tax arbitrage between industrial and commercial importers
- Enhancement of penalties for non-compliance
- Rationalization of withholding taxes on services
- Imposition of duties on luxury vehicles
- Measures to curb fuel adulteration through adjustable Federal Excise Duty on solvents and related products
Administrative Reforms
Officials apprised the committee of administrative reforms, including establishment of a National Faceless Audit Wing and National Assessment Wing, enhanced use of third-party data, algorithm-based dispute resolution, digital invoicing systems, and a Central Data Hub supported by artificial intelligence for risk assessment and compliance monitoring.
