New tax law
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The government has formalised some of its tax reforms by passing the Income Tax (Amendment) Bill, 2024, which is basically identical to the recent ordinance which was derided by the opposition and industry groups. The bill, like the ordinance, aims to tackle the complexities faced by taxpayers, especially regarding higher tax rates imposed on income derived from federal government securities.
It also prohibits non-filers from most banking activities including opening accounts; bars immovable property transfers by non-filers; restricts non-filers from buying any vehicle, except for tractors, with an engine over 800cc; and most controversially, grants FBR officials the authority to freeze non-filers' bank accounts and seize their properties.
The property seizure clause has drawn ire, especially because critics say it could allow FBR officials to punish people for failing to file returns even if they don't actually owe taxes. It also hammers home the government's lack of interest in cultivating a culture of compliance rather than one of fear. Even in the case of the other new restrictions, questions over transparency are at the forefront.
The anger of industry groups, though somewhat misplaced, is still a reflection of the fact that the government is struggling to maintain public trust. Indeed, if it is to silence its critics, the government will have to ensure careful implementation and monitoring that strikes a balance between effective enforcement and fair treatment of citizens.
Other objectives of the amendment include rationalising the tax structure concerning business income, particularly for banking companies. By addressing these pressing issues, the government is taking a necessary step toward creating a more equitable tax framework that encourages compliance while still generating much-needed revenue for public expenditure.
With a reported shortfall of Rs196 billion in tax collection during the first four months of the fiscal year, the need for effective revenue generation mechanisms has never been more apparent.
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Express Tribune
13 hours ago
- Express Tribune
Lawmakers demand tax relief for masses
On June 10, Finance Minister Miftah Ismail had announced an income tax relief of Rs47 billion for the salaried class. PHOTO: FILE Listen to article Lawmakers in the National Assembly on Saturday delivered a detailed and constructive review of the federal budget for FY2025-26 and called for providing more relief to the common man. While participating in the general discussion on the budget, Defence Minister Khawaja Asif said Pakistan suffered huge losses due to tax evasion, especially in sectors like tobacco, real estate, steel, and tyres. "We lose around Rs300 billion annually in tobacco taxes alone." He acknowledged that the Federal Board of Revenue (FBR) has made some improvements, but much more needs to be done. "If we can just improve our tax collection by 50%, we wouldn't need foreign loans," he noted. He demanded accountability and urged the finance ministry and the FBR to brief parliament on the large-scale tax evasion and the people behind it. "We need honesty in governance. Only then can we provide real relief to the people," he said. He gave the example of how public shops in Punjab are rented for very low rates, while private shops in the same area earn ten times more. "This has continued for decades without accountability," he pointed out. He called for a national campaign to end corruption, particularly in sectors dominated by a few corrupt families. Asif praised Finance Minister Muhammad Aurangzeb, calling him a professional and experienced person. He credited him for bringing back international trust in Pakistan's economy. He shared encouraging economic data: GDP growth improved from -0.2% to +2.7%, inflation dropped to 4.6%, and the current account posted a $1.2 billion surplus. foreign investment rose by 20%. He admitted that the public may still be feeling economic pressure but said positive changes are happening. "The business community is showing more confidence, and the stock market recently hit a historic 125,000-point high," he said. He criticized those who now attack the government's economic policy but had once urged the IMF not to support Pakistan. "These people tried to sabotage our economy," he said. "Pakistan is not about any one person. It is a mission, a belief, and a shared history," he added. He urged political leaders to rise above personal ambitions and serve the nation with sincerity. PPP senior leader Mirza Ikhtiar Baig emphasised the pivotal role of the industry, agriculture and services sector in driving long-term economic stability. Acknowledging the ongoing economic challenges, he said the government's push toward reforms, though modest GDP growth of 2.6% continues to be overshadowed by inflation, population pressure and mounting national debt. He raised concern over pension reforms, particularly the withdrawal of posthumous benefits for pensioners' children after 10 years, warning this could create financial distress for many families. The lawmaker also cautioned against harsh tax enforcement measures, such as granting arrest powers to income tax officers, which he said could dampen business confidence. However, he welcomed incentives in the construction and property sectors, including the reduction in withholding tax on property transactions from 4% to 2.5%, elimination of federal excise duty on commercial property transfers and reduction of stamp duty in Islamabad from 4% to 1% — measures expected to boost real estate activity. He also supported the increased defense budget, recognizing the valor and international standing of Pakistan's armed forces, particularly in light of recent hostilities. Mirza Ikhtiar praised the record-breaking $38 billion in remittances sent by overseas Pakistanis and called for an export-led growth model, especially through sectors like IT and rice. 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Naveed Qamar criticized Pakistan's reliance on international lenders and the failure to promote domestic exports, particularly in the cotton sector. The fertilizer subsidies and price controls, he argued, have hurt small farmers while benefiting powerful industrial lobbies. Naveed Qamar has called for the adoption of a clear, flexible, and consistent economic policy in anticipation of potential global oil price hikes, warning that the country cannot afford to remain tethered to outdated and reactive financial planning models. He cautioned that international oil price fluctuations pose direct risks to Pakistan's fiscal strategy, inflation targets, and energy affordability. He criticized the government for preparing budgets based on optimistic oil price assumptions without accounting for geopolitical volatility. "In recent years, our budgets were framed based on declining global oil prices. 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She also warned of the grave threat posed by climate change and called for greater resources to mitigate its impact. Stressing the importance of regional equality, she urged a fair share of development funds for the Saraiki belt, noting its population is comparable to other provinces. Haji Jamal Shah Kakar lauded Prime Minister Muhammad Shehbaz Sharif for earmarking Rs 250 billion for Balochistan, terming it a long-overdue recognition of the province's importance. He welcomed allocations for infrastructure and highways but stressed the need for transparency and proposed the formation of a monitoring committee to ensure efficient fund utilization. PPP MNA Syeda Shehla Raza condemned the Israeli aggression against Iranian civilians, calling for global accountability. She criticized the federal budget for raising taxes and imposing a carbon levy while neglecting Karachithe country's economic hub. Opposing a new Danish university in Islamabad, she argued that existing institutions remain underfunded. She also highlighted the decline in oil and gas output, despite discoveries in Khairpur, and advocated urgent reforms. On a positive note, she welcomed the Reko Diq project, saying it could contribute 1% to Pakistan's GDP next year. Iqbal Afridi raised serious concerns regarding the rehabilitation of the merged districts (former FATA), urging the government to expedite the reconstruction of destroyed homes and ensure the return of displaced populations. He also demanded the withdrawal of newly imposed taxes in tribal areas and criticized delays in releasing development funds. Asia Naz Tanoli commended Prime Minister Shehbaz Sharif for enhancing Pakistan's international image and improving the value of the green passport. She described the budget as balanced and people-centric, acknowledging the difficult decisions taken to pursue economic reform and national security. 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Express Tribune
17 hours ago
- Express Tribune
Faceless customs system rollout halted on flaws
Listen to article A review committee has recommended that the Federal Board of Revenue (FBR) halt the further rollout of the much-publicised Faceless Customs Assessment (FCA) system after discovering that it caused a 57% increase in container clearance time and a decline in revenue. The Review Committee on FCA also questioned the system's design, stating that it had been tested 20 years ago and later discontinued due to similar flaws. After early reports of success, Prime Minister Shehbaz Sharif travelled to Karachi in January to inaugurate the new system. The FCA was introduced to eliminate physical contact between importers and customs officers, aiming to increase revenues and speed up clearance of imported containers. "This committee does not recommend implementation of further phases or rollout of FCA unless its efficacy is confirmed through other means or with larger datasets, or its design is reviewed," the three-member committee stated in its report finalised last month. According to FBR's original plan, the second phase of the FCA was to be implemented by June 2025 at all Appraisement Collectorates, dry ports, and land border stations. The third phase, scheduled for September 2025, would extend the system to all airports and Export Collectorates. However, the committee has now advised halting the expansion due to major issues in the first phase. The FCA's implied objective was to curb collusion between importers and customs officers, which was seen as a cause of revenue loss. But the report states the system "has not achieved this objective." FBR Chairman Rashid Langrial told the National Assembly Standing Committee on Finance this week that the system was not primarily aimed at increasing revenue. The report noted that two of the FCA's basic design concepts — hiding trader information from assessing officers and ending specialised assessment groups — had already been tried and abandoned 20 years ago when Pakistan Customs' first computerised system was introduced. The reasons for their earlier failure remain valid today. The committee found that specialised assessment groups helped build sector-specific institutional memory and stronger customs controls, while also reducing clearance time through repeated handling of similar products. Langrial acknowledged the implementation problems during a meeting with the Finance Committee on Friday and said they would be resolved by next month. However, the very committee formed under his orders has recommended halting the rollout. The final report on FCA and Centralised Assessment Unit (CAU) performance was submitted to FBR management last month, in response to a review ordered by Langrial. The report revealed that in November 2024, before the FCA was implemented, the average clearance time for goods declarations was 25.6 hours. This rose steadily, peaking at 46 hours in April 2025. On average, clearance time increased 57% to 40.2 hours. "It is evident that the dwell time has significantly increased after the implementation of FCA," the report noted. Between July and November 2024 (pre-FCA), 84% of declarations were cleared within 48 hours. This dropped to 70% between December and April 2025 (post-FCA). For goods declarations that were both assessed and examined, average clearance time increased from 74 hours to 81 hoursa 10% jump. The committee also evaluated the system's impact on revenue. Under the previous system, duties collected exceeded declared values by 13% to 17%. But following FCA's introduction, duties and taxes fell. Between February and April 2025, total revenues dropped by 2% to 23% compared to prior months. "The value addition by assessing officers is reflected in the extra revenue collected," the report stated. This contribution dropped from 16% in July-November to 13% in December-April. However, the number of documents called for examination dropped from 37% to 21%. The Director General of Risk Management System and the Member Operations FBR Customs, both part of the review committee, did not respond to requests for comment. The report showed that customs officers now refer more goods declarations to senior officers after assessment. Referrals rose from 6% in the old system to 11% under FCA. Lab referrals also doubled. The WeBOC system allows traders to file reviews before principal appraisers and assistant collectors. Under FCA, such appeals increased from 6% to 14%, further delaying clearance and increasing workload. "Increased examinations, senior officer referrals, lab tests, and especially reviews have offset any time saved from reduced document calls, thereby increasing overall dwell time," the report stated. It also noted that the quality of assessments had deteriorated, as indicated by the surge in review filings. Langrial admitted that clearance times at appraisal and examination stages had risen due to the increased number of reviews filed by importers. "At the design stage, we did not anticipate the rise in reviews," he said, adding that FBR would introduce virtual hearings by assistant and deputy collectors starting July to address the issue. The new FCA system was designed to address long-standing issues in customs processes by enabling remote, technology-driven assessments and minimising physical contact through automation. During the first few weeks of FCA's implementation, the average time for container clearance had initially improved, dropping from 108 hours to 66. 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Business Recorder
18 hours ago
- Business Recorder
Senate panel opposes FBR arrest powers under CrPC
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