Senate panel rejects tax on online businesses
The Senate Standing Committee on Finance reviewed the Finance Bill 2025 on Wednesday and recommended a zero-rated tax on the income of up to Rs1.2 million and rejected a proposal to impose tax on individuals doing small online businesses.
During a meeting, chaired by its chairman Saleem Mandviwala, the committee approved the proposal to impose tax on the income of online academies and teachers but opposed the levy of tax on the income of the Islamabad Club.
Federal Board of Revenue (FBR) officials informed the meeting that teachers were providing online digital education services, earning Rs20-30 million. They added that a new clause had been introduced in the Finance Bill to impose tax on those doing e-commerce business, using online marketplaces.
All individuals providing services via the internet and electronic networks will be affected, FBR officials said. They added that the tax will also apply to music, audio and video streaming platforms, cloud services, online software application providers, telemedicine and e-learning services.
The tax would also be imposed on online banking services, architectural design services, research and consultancy reports, accounting services and other online facilities in the form of digital files, the FBR officials stated. The committee rejected a proposal to tax individuals doing small online businesses.
The FBR chairman said that those with an annual income of 1.2 million will have to pay Rs12,500 in taxes.
Committee member Senator Shibli Faraz said that there should be no tax on the income of Rs600,000 to Rs1.2 million.
FBR Chairman Rashid Langrial told the committee that it had been decided to collect tax from entertainment clubs, including the Islamabad Club. However, the committee chair opposed the move.
Langrial said that the common man did not benefit from this club, as it was the luxury of 300 people.
The FBR officials said that there was a proposal to impose restrictions on the purchase of property and vehicles by non-filers. They added that a limit of 130% of the income had been set for the purchase of property by the non-filers.
Senator Mohsin Aziz said that the limit of 130% for the purchase of property by non-filers should be increased. The committee recommended increasing the limit to 500%.
Finance Minister Muhammad Aurangzeb said that steps were being taken to bring non-filers into the tax net.
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