He also announced that the provincial budget for the financial year 2026-27 will be presented on June 16, adding that the preparation of the provincial budget has been impacted by the delays in the federal budget.

“The Punjab government is establishing a new authority which will be implemented soon after the budget,” he said while speaking at the Pre-Budget Roundtable Conference for 2026-27, organised by the Punjab Finance Department on Monday.

The event was attended by Zaki Aijaz, Regional Chairman of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), as well as Faheem-ur-Rehman Saigol, the President of the Lahore Chamber of Commerce and Industries (LCCI). Other attendees included the presidents of the chambers of commerce and industries from Gujranwala, Gujrat, Kasur, and Sialkot, along with international donor organisations, agriculturalists, academics, representatives from farmers’ associations, and senior officials from various provincial departments.

In response to a question about the National Commission Award (NFC), he stated that Punjab will not compromise on its share as it is already operating with limited resources. He emphasised, “We need the resources to fund several initiatives that have been launched recently.” However, he mentioned that the situation will be re-evaluated when the NFC issue comes up.

Regarding the Provincial Finance Commission, he stated that it cannot be implemented without local government in Punjab. “Local body elections are expected to take place in September or October, and once the new local bodies are in place, the PFC will come into effect,” he added.

Talking about the coming Punjab budget, he said as with the previous two budgets, no new taxes will be imposed in this budget. Following the instructions of Punjab Chief Minister Maryam Nawaz Sharif, the budget is being prepared with a focus on public needs. “The government’s top priority is to provide employment, and investment will be made in industrial infrastructure for the upcoming financial year. The new budget would place special emphasis on the development of economic zones and industrial infrastructure, alongside introducing concrete measures to support the growth and competitiveness of all industrial sectors,” he added.

He noted that the available financial resources remain insufficient to meet the needs of Punjab’s 130 million population, yet the government remains committed to protecting the public from additional tax burdens. Instead, it is pursuing a strategy focused on broadening the tax base, promoting industrialisation, and improving the ease of doing business to strengthen provincial revenues, he added.

The Finance Minister briefed the attendees on the Punjab government’s performance over the past two years, noting that for the first time, significant progress has been made on announced projects, with several of them already completed. He highlighted the flagship programmes of the Punjab government, including Apna Ghar Apna Chhat, Sathra Punjab Kisan Card, and the Ramzan Nighaban Package. “To date, 133,990 housing loans have been issued under the Apna Ghar Apna Chhat programme. The Suthra Punjab initiative has been expanded from urban areas to villages at the district and tehsil levels. Last year, Rs106 billion was allocated for this program, whereas Rs99.41 billion has been released in the current financial year. The successful implementation was evident through effective arrangements made for cleanliness during Eid-ul-Azha,” he added.

He also discussed the current economic situation in the province, stating that the last financial year posed significant challenges for both federal and provincial governments, particularly due to the severe floods that impacted 27 districts. “Under the Chief Minister’s leadership, for the first time, a provincial government rehabilitated flood victims using its own resources without federal assistance, distributing approximately Rs50 billion in aid. To address financial difficulties resulting from tensions between the US and Iran, the government reduced fuel expenses by 50 percent. The Chief Minister, provincial ministers, and parliamentary secretaries did not receive salaries for two months, while 25 percent of the salaries of other assembly members were deducted. Additionally, 220,000 efficient bicycle owners received Rs200,000 per month to help reduce fuel expenses, and 226,000 farmers were granted Rs1,500 per acre. Rs750 million was allocated to provide free travel facilities to the public. Despite these challenges, the government ensured the implementation of over 100 measures.

The Minister stated that, for the first time in Punjab’s history, the government has formally invited stakeholders from all major sectors to present their concerns and recommendations prior to the formulation of the provincial budget. He said the initiative reflects the government’s commitment to preparing a truly participatory and people-oriented budget.

He said the Pre-Budget Round Table Conference was not a symbolic exercise but a meaningful consultative process. He assured stakeholders that every feasible recommendation presented during the conference would be given due consideration for inclusion in the forthcoming provincial budget. However, he stressed that the full implementation of development proposals requires enhanced tax compliance and broader revenue generation.

Welcoming the recommendations put forward by representatives of the chambers of commerce and industry, academia, media, and civil society, he announced that future such conferences would be convened in May each year, allowing stakeholders’ proposals to be incorporated into the budget formulation process in a more timely and effective manner.

Copyright Business Recorder, 2026

The Resolution, passed in a duly convened meeting of LTBA office bearers and members, calls for an immediate, independent, and transparent inquiry by the Federal Board of Revenue (FBR) and other competent authorities.

As per resolution, the controversy arose when, according to information placed before the Association, PMA members in the Larkana region were allegedly encouraged and pressured to file Revised Returns of Income declaring substantially enhanced tax liabilities, without the provision of any documentary evidence, third-party information, audit findings, or other legal justification as required under the Income Tax Ordinance, 2001.

When contacted, Abdul Waheed Tunio, a learned member of the LTBA told this correspondence that LTBA engaged constructively throughout, facilitating meetings between PMA leadership, including Dr Sikandar, President PMA Larkana and Dr Dayali Gul, President PMA Sindh and tax authorities.

The PMA leadership demonstrated willingness to cooperate and proposed lawful measures to contribute additional revenue to the national exchequer. However, when LTBA repeatedly sought the legal basis for the demanded revisions, no satisfactory material was produced.

LTBA maintained its principled legal position that no taxpayer may be compelled, directly or indirectly, to revise a return of income unless such revision is supported by law, evidence and the taxpayer’s own voluntary and informed disclosure.

Accordingly, LTBA declined to endorse any proposal that, in its legal opinion, could result in the obtaining of revised returns without lawful grounds, Waheed added.

What has drawn sharp criticism is what LTBA describes as an act of apparent retaliation. Subsequent to the Association’s refusal to endorse the proposed revisions, the audit cases of President and General Secretary LTBA, were selected through the office of the CIR, Larkana Zone.

LTBA contends that the timing and circumstances of these audit selections create a serious and reasonable apprehension of mala fide intention, abuse of authority, and victimization of elected bar representatives for discharging their professional obligations independently and in accordance with law.

The Resolution sets out six formal demands, strong condemnation of any attempt to obtain revised returns without legal basis or statutory justification, expression of no-confidence in the conduct of the said tax official, an immediate, independent, and transparent inquiry by the FBR Chairman and competent authorities into the allegations of coercive conduct and retaliatory audit selection.

Review of the audit cases of the LTBA President and General Secretary by a higher independent authority, with withdrawal of the audits if found to be mala fide or retaliatory. Appropriate disciplinary and administrative action against any officer found responsible for misuse of authority, LTBA added.

Copyright Business Recorder, 2026

Kiani, who led the government team in detailed negotiations with the trader community, said the new fixed tax scheme would apply to businesses with an annual turnover (total sales) of up to Rs200 million.

Under the scheme, a tax of one per cent would be payable through a simple form that would be made available in all local languages.

READ MORE: Shopkeepers and small traders: FBR set to launch new scheme

The announcement was made through a recorded message by Finance Minister Muhammad Aurangzeb, Minister of State for Finance Bilal Azhar Kiani, and Member, Federal Board of Revenue (FBR), Hamid Attique Sarwar. They said the fixed tax regime had been finalised in consultation with trader bodies and representatives in response to their demand for a simplified tax compliance mechanism.

The scheme is expected to bring between 3.5 million and 4 million small traders into the tax net and is being described by the government as a significant step towards documenting the economy without increasing tax rates.

Under the scheme, traders with an annual turnover of up to Rs200 million will be eligible to opt into the new regime by paying a fixed tax equivalent to one percent of their declared sales. The ministers said the scheme is entirely voluntary and traders may choose to remain under the existing normal tax regime if they prefer. Under the scheme, a tax of one per cent would be payable through a simple form that would be made available in all local languages.

Aurangzeb said the government’s priority was to expand the tax base rather than impose additional burdens on existing taxpayers.

“We need to broaden the tax system. Instead of increasing tax rates, we want to gradually reduce the burden on existing taxpayers by bringing more people into the tax net,” he said. The new framework has been developed after extensive consultations with traders’ associations and incorporates lessons learned from previous trader tax schemes.

Copyright Business Recorder, 2026

Addressing an urgent press conference at the National Press Club Islamabad Friday alongside tobacco growers’ representatives, including Abdul Latif, Irshad Khan said that while exports are encouraged and facilitated worldwide, Pakistan has imposed heavy Federal Excise Duty (FED) and other restrictions on tobacco exports. He stated that exporters are required to pay approximately Rs390 per kilogram in excise duty and other taxes in advance, making exports nearly impossible for small and medium-sized businesses.

He suggested that the government introduce alternative mechanisms such as bank guarantees or post-dated cheques, which could significantly boost exports and help the country earn valuable foreign exchange.

Khan said that last year’s tobacco crop in Khyber Pakhtunkhwa remains unsold, while a new crop is about to enter the market. As a result, many disappointed farmers are being forced to destroy their produce, creating an alarming situation for the agricultural economy.

He noted that districts including Mardan, Swabi, Charsadda, Buner and Mansehra are major tobacco-producing regions, where thousands of families depend on the crop for their livelihoods. Recent climate-related challenges, including heavy rains and storms, have further compounded farmers’ difficulties.

The growers’ representatives alleged that several flaws exist in the policies and quota system of the Pakistan Tobacco Board. They claimed that some companies reduced their procurement contracts this year while failing to offer adequate increases in purchase prices, placing additional financial pressure on farmers.

The representatives further stated that Pakistan exported tobacco to the United States and other countries for the first time last year, leading to increased demand for Pakistani tobacco in international markets. However, they argued that the current taxation and regulatory framework is hindering the sector’s growth.

During the press conference, speakers said that all major political parties had supported resolving the issue during a recent All Parties Conference. According to participants, representatives of the Pakistan Muslim League-Nawaz (PML-N), Pakistan People’s Party (PPP), Pakistan Tehreek-e-Insaf (PTI), Awami National Party (ANP) and Jamaat-e-Islami assured stakeholders that they would engage with the federal government to seek a solution.

The speakers emphasised the need for a joint mechanism comprising representatives of the government, FBR, Pakistan Tobacco Board, farmers and industry stakeholders to ensure a balanced approach to tax collection, exports and the protection of farmers’ interests.

They warned that failure to address the issues promptly could result in severe economic hardships for thousands of farmers and businesses, while also negatively impacting the country’s exports and foreign exchange earnings.

At the conclusion of the press conference, participants called on the government to recognise the tobacco industry as an important component of the national economy and to take immediate practical measures to restore the confidence of farmers, industrialists and exporters.

Copyright Business Recorder, 2026

During the visit, Chairman PRA Moazzam Iqbal Sipra briefed the Minister on the Authority’s key achievements, including record revenue collection figures, ongoing efforts to register new taxpayers across the province, and plans being developed for the upcoming fiscal year. The Minister commended the PRA for its performance and acknowledged its role in consolidating the province’s financial standing.

Addressing the broader vision for revenue growth, Bilal Yasin stated that promoting a culture of taxation and ensuring greater transparency within the system were indispensable to boosting provincial revenues and unlocking new development opportunities. He further noted that under the leadership of the Chief Minister of Punjab, a record budget has been allocated this year to accelerate development projects and advance public welfare initiatives across the province.

The Minister placed particular emphasis on the urgent need for a robust digital monitoring system, describing it as a vital tool for curbing tax evasion and eliminating leakages in the services sector. Chairman Sipra, in turn, informed the Minister that comprehensive legislation aligned with the Chief Minister’s vision is being prepared ahead of the next fiscal year to further enhance revenue generation. He added that the establishment of the Large Taxpayer Unit and the rollout of digital monitoring systems have already delivered measurable improvements in the Authority’s performance and operational efficiency.

Copyright Business Recorder, 2026

The development was disclosed by Finance Minister Muhammad Aurangzeb, flanked by Minister of State Bilal Azhar Kayani, in a press conference.

“Our tax system needs to become more transparent and move on a sustainable footing,” said Aurangzeb.

“We need to reduce the tax rate,” the finance minister said, admitting that several sectors, including the documented corporate sector and the salaried class, are facing a “disproportionate tax burden”.

He said that today’s measure targets small retailers, which make up around 3-4 million shopkeepers. “It is an important milestone in terms of expanding our tax net,” he said.

The finance minister said that despite tensions in the Middle East, the country’s economy remained stable. “We overcome our challenges via our own resources, and didn’t take assistance from anyone,” he shared.

Explaining the tax scheme, Kayani said that the scheme would be applicable to retailers having an annual turnover of Rs200 million or less. Under the scheme, a 1% tax would be imposed on the retailer’s annual turnover.

“With Holding Tax (WHT), which is already deducted, will be adjusted in this tax,” said the state minister. “However, at the time of form submission, the retailer will have to pay at least Rs25,000,” he added.

The state minister said that this is an optional scheme for the retailer, but they will avail several benefits from it, including exemption from FBR’s POS requirement and audit.

“Retailers, including both non-filers and filers, can avail this scheme.”

He warned that retailers who fail to get registered in the fixed tax scheme or in the normal tax regime would be penalised.

Moreover, street cart sellers remain exempt from this scheme, he shared.

Kayani said that the scheme is being introduced after consultation with trade associations.

PCDMA Chairman Salim Valimuhammad said that mounting compliance requirements and aggressive audits had been steadily driving taxpayers into the informal economy.

“People generally want to pay taxes, but due to limited awareness and tech-savviness they make honest mistakes – and FBR takes advantage of that,” he said, stressing that officers should guide the taxpayers instead of issuing “harsh notices”.

“Taxpayers generally want to comply with tax laws, but complicated procedures and lack of guidance often result in genuine mistakes,” Valimuhammad said, adding that the FBR should adopt a facilitative and educational approach instead of relying on notices and enforcement measures.

Among the association’s key recommendations is a reduction in the GST rate from 18 percent to 16percent, followed by a gradual transition to single-digit taxation.

Valimuhammad argued that lower tax rates would improve compliance, broaden the tax base and ultimately increase government revenue.

The PCDMA chairman also called for the restoration of the Final Tax Regime (FTR) for commercial importers and the return of audit exemptions that were previously linked to the payment of additional sales tax. He said the withdrawal of these protections had increased uncertainty and compliance costs for importers.

To ease liquidity constraints faced by traders and wholesalers, PCDMA proposed restoring Section 8B facilities for commercial importers. As an interim measure, he suggested allowing businesses to adjust up to 95 percent of output tax against input tax, with only 5 percent payable in cash.

Highlighting concerns over fake invoicing, the PCDMA chief recommended reducing the tax rate from 4 percent to 1 percent, arguing that a lower rate would encourage compliance and reduce fraudulent practices.

On the matter of income tax, the PCDMA proposed lowering of the withholding tax on local supplies of raw materials from the current rate of 5 percent and 5.5 percent to 2 percent and 2.5 percent respectively. He said that lower withholding taxes would encourage businesses to operate within the documented economy.

The association also objected to what it described as unequal tax treatment between commercial and industrial importers under Section 148 of the Income Tax Ordinance. Valimuhammad said identical imports should be taxed uniformly, regardless of whether they were imported by traders or manufacturers.

Among customs-related proposals, the PCDMA chairman called for the abolition of the Rs500 WeBOC token fee on goods declarations, arguing that importers were effectively paying duplicate charges after the introduction of the Pakistan Single Window (PSW) system.

He sought the restoration of the NTN-based self-clearance facilities for commercial importers, saying that the withdrawal of the facility had increased delays and administrative bottlenecks at customs offices.

The PCDMA also recommended discontinuing the Export Facilitation Scheme (EFS), claiming it was liable to misuse and revenue leakage. Instead, he urged the government to strengthen and expedite the tax refund system to support genuine exporters.

The proposals have been submitted to the FBR and are expected to be discussed during pre-budget consultations with trade and industry stakeholders.

Copyright Business Recorder, 2026

While the tax should be maximum 14 percent. The energy prices of electricity and gas for the industry should be fixed at 9 cents per US dollar. He further said that it is necessary to hold a long-term policy for 10 years. In the last few years, billions of dollars have gone to Dubai. The government should also immediately announce tax incentives for property so that Pakistanis can bring back investment from there.

According to the statistics, in the last 3 years, we have flown more than 20 billion in property investment in Pakistan. We have been hearing about the restructuring of the FBR for the last 20 years. But it has not been restructured yet.

The government should introduce a 10-year industrial and commercial policy. A law should be made on this that no government can change it. The government should give the people a tax-free budget this year.

Copyright Business Recorder, 2026

The matter arose from a complaint filed under Section 10 (1) of the Federal Tax Ombudsman Ordinance, 2000, alleging maladministration on the part of the FBR due to its failure to respond to communications submitted by the complainant.

According to the complaint, the complainant had written to the Chairman FBR on 18 January 2024, proposing special measures for the realisation of taxes allegedly not being charged, particularly in relation to taxable supplies. He maintained that the information in his possession had the potential to generate billions of rupees in additional national revenue.

The complainant stated that despite the passage of considerable time, no response was received from the FBR. He subsequently submitted a reminder on 27 October 2025 to the Chairman FBR, warning that failure to address the matter would compel him to seek redress before the Federal Tax Ombudsman. However, the reminder also remained unanswered, leading him to file a formal complaint before the FTO.

During the investigation, the FTO observed that the issues raised in the complaint primarily related to matters falling under the Islamabad Capital Territory (Tax on Services) Ordinance, 2001, and provincial sales tax laws. As these statutes do not fall within the jurisdiction of the Federal Tax Ombudsman under the definition of “Relevant Legislation” contained in Section 2 (6) of the FTO Ordinance, 2000, the complaint was initially closed for want of jurisdiction.

Aggrieved by the decision, the complainant filed a review petition, contending that the FTO had incorrectly assumed that all nineteen reported cases related to sales tax on services. He clarified that only five cases pertained to services, while the remaining cases involved taxable goods, and furnished details to substantiate his position.

While examining the review petition, the Federal Tax Ombudsman emphasised that citizens who, in good faith, provide information capable of broadening the tax base, identifying revenue leakages, or improving tax administration perform a valuable public service.

The Ombudsman noted that such information merits proper institutional consideration, even where it may not fall within the scope of the Inland Revenue Reward Rules, 2021.

The FTO further observed that the case highlighted a significant systemic gap within the existing tax administration framework. Although reward mechanisms exist for certain tax evasion cases, there appears to be no comprehensive process for handling information relating to revenue leakages, tax-base expansion, administrative shortcomings, or broader compliance concerns. As a result, potentially valuable information supplied by citizens may not receive due attention, leading to missed opportunities for revenue enhancement and administrative improvement.

In view of these observations, the Federal Tax Ombudsman recommended that the Federal Board of Revenue examine the feasibility of establishing a structured framework for dealing with information received from citizens and informers regarding revenue leakages, tax-base expansion, and systemic compliance issues.

The FTO specifically recommended that the FBR consider developing transparent eligibility criteria for recognition or rewards in cases where information demonstrably contributes to revenue recovery, prevention of revenue loss, expansion of the tax base, or measurable improvements in tax administration. The Ombudsman also advised the issuance of necessary rules, guidelines, or administrative instructions to effectively implement and oversee such a framework.

The review petition was disposed of in the above terms, and the order in review shall be read together with the Forum’s earlier order dated 20 February 2026.

Copyright Business Recorder, 2026

According to an FTO order issued on Monday, a complaint has been filed under Section 10 (1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance), alleging an unlawful invocation of Section 175C of the Income Tax Ordinance, 2001, and forcible recovery of Rs1,500,000 from the complainant without due process and lawful authority.

The departmental plea that the deposit was “voluntary” is devoid of illegality, substance, and cannot automatically cure substantive or procedural irregularities, especially where the surrounding circumstances indicate the incidence of coercive proceedings by revenue authorities possessing dominant statutory powers.

The FTO held that Section 175C of the Income Tax Ordinance, 2001, primarily empowers the Inland Revenue authorities to conduct an inquiry, obtain information, and enforce the production of records for purposes of determining due tax liability. The provision is investigative in nature and does not independently authorise coercive recovery or collection of tax without determination of liability under the relevant charging and assessment provisions of law.

It is an established principle of fiscal jurisprudence that taxes can only be levied, assessed, and recovered strictly in accordance with law.

Any recovery during inquiry proceedings must remain traceable to a lawful statutory framework and supported by due process.

The record reveals that after the initiation of proceedings, the taxpayer deposited Rs 1,500,000, after which the department discontinued monitoring and thus failed to pursue the proceedings to their logical conclusion. This conduct on the part of the Respondent department is legally indefensible. The superior courts of Pakistan have repeatedly deprecated extra-legal recoveries and coercive collection practices unsupported by statutory determination. Needless to emphasise, the act of extracting “voluntary deposits” during inquiry proceedings creates a serious presumption of unequal bargaining position between the taxpayer and revenue authorities, the FTO added.

In view of the foregoing, the complaint is accepted. The actions of the Respondent department in obtaining a deposit during the proceedings under Section 175C and thereafter failing to conclude the proceedings through a lawful adjudicatory process are held to constitute maladministration within the meaning of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000.

Accordingly, it is recommended that the Federal Board of Revenue should conduct a fact-finding inquiry regarding the circumstances under which the amount was obtained from the complainant.

The FBR should also, where warranted, fix responsibility against officers found to have acted beyond lawful authority and issue appropriate directions to the concerned Chief Commissioner to ensure that no adverse coercive or punitive action is initiated against the complainant, except strictly in accordance with law and due process.

The FBR should issue appropriate administrative guidelines regulating acceptance of so-called “voluntary deposits” during inquiry or monitoring proceedings and ensuring that any such deposit remains subject to transparent, lawful determination under the relevant statutory framework, the FTO added.

Copyright Business Recorder, 2026

Details of the case revealed that the case involved the owner of a Surgical Hospital, Haripur. RTO Abbottabad officials visited his business premises armed with a notice signed by the Chief Commissioner invoking Section 175C. The taxpayer, under evident pressure, deposited Rs. 1500000.00 into the government treasury on 26 December 2025, whereupon the department abruptly discontinued all monitoring proceedings without issuing any speaking order or determining any actual tax liability.

Waheed further added that Section 175C is investigative in character and does not independently authorize coercive recovery or collection of tax without prior statutory determination of liability. The order categorically states that no departmental record explains how the figure of tax was computed and that the department’s conduct, taking money and walking away without any adjudicatory conclusion, constitutes gross administrative impropriety and maladministration under Section 2(3)(i)(b) and (ii) of the Federal Tax Ombudsman Ordinance, 2000.

Waheed Butt further observed that the case is far from an isolated incident.

“Tax collection is a sovereign function regulated strictly by law. What is happening under the pretext of Section 175C across the country is not tax collection, it is sponsored tax robbery. Officers descend on business premises, create an atmosphere of intimidation and pocket whatever amount the terrified taxpayer agrees to pay.

There is no assessment, no order, and no accountability. The FTO’s ruling must serve as a wake-up call for FBR’s leadership to put an immediate end to this racket,” Waheed added.

Copyright Business Recorder, 2026

Responding to the issued brief, Mubashar Akram, Country Director of ACT Alliance Pakistan, said Pakistan’s tobacco taxation debate must be based on actual market dynamics rather than assumptions that treat the entire cigarette market as tax-compliant. “The key challenge facing Pakistan is not simply the level of taxation. The real issue is the shrinking tax-paid market caused by the rapid expansion of illegal cigarette trade, which continues to erode the government’s revenue base,” Akram said.

According to Akram, WHO’s argument that the absence of inflation-adjusted FED increases has reduced the real value of cigarette taxes fails to account for the structural composition of Pakistan’s cigarette market. Citing findings from the Pakistan Cigarette Market Assessment conducted by Ipsos, he said illegal cigarettes now account for approximately 54 percent of total cigarette consumption in Pakistan. Complementary estimates based on Oxford Economics analysis indicate that over 40 billion illegal cigarette sticks are consumed annually in a market estimated at around 80 billion sticks.

“These figures suggest that more than half of cigarette consumption is occurring outside the tax net. Under such circumstances, any increase in statutory tax rates applies only to the compliant segment of the market, limiting its overall impact on revenue collection,” he stated.

Akram argued that available evidence points to a strong correlation between higher legal cigarette prices and the growth of illegal trade. “When the price gap between tax-paid and untaxed cigarettes widens, consumers increasingly shift toward cheaper illegal products. As a result, higher taxes may not necessarily translate into higher revenues and can instead accelerate the migration of consumers to the illegal market,” he said.

Referring to production data from the Pakistan Bureau of Statistics (PBS), Akram highlighted historical trends that demonstrate the relationship between excise increases and declines in legal cigarette production.

According to PBS data, tax-paid cigarette volumes fell from approximately 67 billion sticks to 37 billion sticks following successive excise increases between FY2013 and FY2017. After subsequent tax reforms and a period of relative fiscal stability, legal volumes recovered to nearly 60 billion sticks. However, following substantial tax increases implemented during FY2022 to FY2024, legal production once again declined sharply to approximately 33 billion sticks, before showing signs of recovery in recent months. “This recurring pattern suggests that sharp tax increases often shift production and consumption from formal channels to illegal ones rather than sustainably expanding the tax base,” Akram noted.

WHO’s policy brief also argues that maintaining current tax rates has contributed to increased cigarette consumption and limited revenue growth. However, Akram said available evidence paints a different picture. “Following significant FED increases during 2022 and 2023, legal cigarette sales volumes declined sharply while overall consumption remained broadly stable. This indicates substitution from taxed products to untaxed products rather than a meaningful reduction in demand,” he explained.

He added that revenue gains from higher tax rates have been relatively modest compared with the magnitude of the increases because the taxable base itself contracted. “This effect was particularly evident in the premium segment, where rising prices coincided with falling volumes and a shrinking tax base,” he said.

Akram noted that the phenomenon is consistent with established economic theory. “As tax rates increase beyond a certain threshold, marginal revenue gains begin to decline because consumers switch to lower-taxed or untaxed alternatives. This is consistent with the principles of the Laffer Curve, where excessively high rates can weaken the effective tax base and reduce revenue efficiency,” he explained.

Addressing WHO’s suggestion that stable tax rates have reduced real cigarette prices and contributed to increased consumption, Akram said there is little evidence to support claims of sustained growth in aggregate demand. “Long-term market estimates indicate that Pakistan’s annual cigarette consumption has remained broadly stable at approximately 80 billion sticks. The major change has been the movement of volumes between the legal and illegal sectors rather than an overall increase in smoking,” he said.

According to Akram, recent increases in recorded legal production should therefore be interpreted cautiously.

“Improved enforcement measures can lead to the recapture of illegal volumes into the formal economy. Consequently, higher legal production figures do not necessarily mean overall cigarette consumption has increased,” he stated.

The WHO brief also attributes the growing share of economy cigarette brands to industry efforts aimed at reducing tax liabilities. However, ACT Alliance Pakistan maintains that the trend is primarily consumer-driven. “Pakistan is an extremely price-sensitive market, particularly among lower-income consumers. Affordability pressures naturally encourage smokers to switch to lower-priced products,” Akram said.

He cited findings from IPOR and Ipsos market studies, which indicate that more than 50 percent of cigarette brands on the market are sold below the legally mandated minimum retail price. Many of these products, he added, are also sold without mandatory graphic health warnings and other regulatory requirements. “These findings highlight the scale of market non-compliance. Consumers are not only shifting from premium to economy brands within the legal market but also moving toward illegal products that are significantly cheaper and widely available,” he said.

Akram argued that illegal trade undermines both fiscal and public health objectives. “When illegal products dominate a substantial portion of the market, governments lose tax revenue while tobacco-control measures such as minimum pricing regulations, health warnings and TAPS restrictions become less effective,” he noted.

While reaffirming support for evidence-based tobacco control policies, Akram emphasized that enforcement must precede any further tax increases. “Sustainable revenue growth depends on expanding the compliant tax base rather than repeatedly increasing rates on a shrinking formal sector,” he said.

He called for stronger implementation of track-and-trace systems, tighter control over tobacco inputs and raw materials, enhanced market surveillance, and coordinated action against illegal supply chains. “Without meaningful improvements in enforcement and compliance, further excise increases or automatic tax indexation are unlikely to deliver the intended revenue outcomes. The priority should be to bring the untaxed market into the formal economy before imposing additional burdens on compliant taxpayers,” Akram concluded.

Copyright Business Recorder, 2026

The directions were passed in order to facilitate the taxpayers, as per a press release.

“These offices will observe May 30and 31 as normal working days for collection of duties and taxes,” the press release said.

The development came during a meeting between Finance Minister Muhammad Aurangzeb and a delegation of PTC at the Finance Division on Monday.

The delegation was led by Usman Zahur, Area Director (APMEAC) & General Manager Pakistan, and included senior representatives from marketing, corporate affairs, and fiscal affairs.

During the meeting, the finance minister outlined the government’s broader fiscal reform agenda focused on strengthening revenue mobilisation, broadening the tax base, improving enforcement, and enhancing transparency through technology-driven systems.

He noted that ongoing reforms in tax administration centred on people, processes, and technology are aimed at improving compliance, reducing leakages, and ensuring fair revenue collection across the economy.

The minister highlighted that enhanced enforcement measures, supported by digitisation, technology-based monitoring systems, and coordinated operations by relevant agencies, are contributing to improved compliance and revenue collection in several sectors.

He noted that enforcement actions in industries including sugar, cement, beverages, textiles, and tobacco are helping address illicit and undocumented economic activity.

The PTC delegation appreciated the government’s reform and enforcement initiatives and shared views on the tobacco sector, including excise taxation, illicit trade, market dynamics, and export competitiveness.

The delegation acknowledged recent actions against illegal and non-compliant operators and emphasised the importance of a stable and predictable taxation framework to support formal sector growth and sustainable revenue generation.

Discussions also covered regulatory and taxation issues, sectoral competitiveness, market trends, and the importance of strengthening enforcement to reduce the share of illicit products operating outside the documented economy. Both sides exchanged views on coordinated enforcement mechanisms involving federal and provincial authorities.

The finance minister reiterated that revenue mobilisation and effective enforcement remain central to the government’s fiscal reform agenda.

He emphasised that while the government is committed to ensuring policy consistency and strengthening compliance, all sector-specific proposals would be evaluated in line with broader fiscal objectives and economic priorities.

The meeting also discussed export potential and investment opportunities within the tobacco sector and related value-added products.

The delegation highlighted Pakistan’s role as a regional manufacturing and export base for certain product categories and shared perspectives on international market opportunities.

Discussions further included regional experiences relating to enforcement, taxation models, and regulatory practices in comparable markets.

Aurangzeb appreciated the delegation’s input and reaffirmed the government’s commitment to continued engagement with the formal business sector to support investment, exports, industrial activity, and sustainable economic growth.

He stated that the government would continue pursuing reforms aimed at improving the ease of doing business, strengthening compliance systems, and creating a more transparent and competitive economic environment.

The cumbersome return forms have been notified by the FBR through an SRO.835(I)/2026.

The FBR has also notified draft of the electronic income tax return forms for association of persons/firms.

Under the S.R.O835(1)/2026, the draft Electronic Returns for Individuals, SME, AOPs and companies for Tax Year, 2026 have been issued for comments.

Copyright Business Recorder, 2026

During the meeting, the delegation briefed the minister on the growing scale of illicit cigarette trade in Pakistan, noting that a significant portion of the market remains undocumented, resulting in an estimated annual revenue loss of around Rs350 billion, i.e. USD1.25 billion.

It was highlighted that nearly 45 to 47 billion cigarettes are being sold without payment of taxes, creating an uneven playing field for the formal sector.

The discussion focused on structural issues in the tobacco supply chain, particularly the procurement of tobacco leaf, under-reporting of production, and weak traceability mechanisms. The delegation pointed out that although registered companies operate under strict regulatory frameworks, undocumented production and misuse of contracts enable informal players to access raw materials and expand illicit manufacturing.

According to the statement, participants emphasised that the issue extends beyond taxation, with concerns relating to undocumented income, money laundering, and broader economic distortions.

The minister was informed that a limited number of actors benefit disproportionately from the undocumented segment, while formal businesses continue to face compliance and cost pressures.

The delegation stressed that while laws, tax stamp systems, and regulations are already in place, their implementation remains inconsistent. It was noted that enforcement requires coordinated action by multiple institutions, including federal and provincial authorities.

The role of the Pakistan Tobacco Board (PTB) was also discussed. Participants highlighted that while the Board has regulatory functions such as crop estimation and price setting, its enforcement capacity is limited. The need for restructuring and strengthening the board to play a more proactive role in documentation and monitoring was emphasised.

The meeting also reviewed policy challenges arising from Pakistan’s commitments under the International Monetary Fund programme, particularly regarding the gradual removal of import restrictions and equal treatment of commercial and industrial importers. While these reforms aim to liberalise trade, stakeholders noted that they may complicate efforts to control the supply of key inputs used in cigarette manufacturing.

Jam Kamal acknowledged the complexity of the issue, describing it as a “multi-layered challenge” requiring a comprehensive approach from farm-level production to retail enforcement. He emphasised that the core problem lies in weak enforcement rather than the absence of policy.

The minister underscored the importance of aligning federal and provincial efforts, noting that effective regulation of tobacco cultivation and local markets requires active provincial involvement alongside federal agencies such as the FBR and FIA.

He reiterated the government’s commitment to supporting the formal sector, promoting exports, and ensuring a fair and transparent business environment. He further directed that stakeholder proposals be consolidated into actionable recommendations, with a focus on strengthening enforcement mechanisms, improving traceability, and gradually reducing the size of the informal economy.

The meeting was chaired by FBR Chairman Rashid Mahmood Langrial and attended by all FBR’s relevant members here on Monday at the FBR Headquarters.

The meeting on new revenue mobilisation measures discussed all aspects of enforcement actions to be taken during May-June period of 2025-26.

In an extraordinary development, sources said that the embargo may be imposed on taxpayers where recovery is admissible under the law, stay expired, but taxpayer is not willing to pay the legitimate amount of pending tax despite all efforts.

READ MORE: FBR misses tax target by Rs610bn

Moreover, the FBR will issue instructions to the field formations to maximize efforts on recovery of arrears and attachment of bank accounts in cases where court stays have been expired. The recovery of pending tax arrears is the top priority of the FBR and all action would be taken where stay has been expired. The enforcement measures, including attachment of bank accounts, would be enforced where six months have been expired after stay orders.

According to sources, the new revenue mobilization measures does not mean any new taxation measures or mini-budget for the outgoing fiscal year. However, recovery of pending dues from taxpayers is the top priority of the FBR during the remaining period of 2025-26.

Copyright Business Recorder, 2026

The complaint was filed under Section 10(1) of the Federal Ombudsman Ordinance, 2000, challenging the suspension of the complainant’s Sales Tax Registration Number (STRN). The complainant contended that the registration was suspended on May 2, 2025, without prior notice or an opportunity of hearing—allegedly in violation of Section 21 of the Sales Tax Act, 1990, read with Rule 12 of the Sales Tax Rules, 2006, and relevant case law of the Sindh High Court. It was further argued that, under the law, such suspension is temporary and becomes void if not followed by a blacklisting order within 90 days.

According to the complaint, despite the lapse of more than the prescribed period, the authorities neither issued a blacklisting order nor restored the STRN, resulting in financial losses and disruption of business operations.

However, the Revenue Division, in its comments, raised serious concerns regarding the complainant’s tax declarations. It was pointed out that the complainant—registered as a manufacturer of ice blocks—had declared an unusually high carry-forward amount of over Rs. 19 million without making any corresponding tax payments. This discrepancy translated into a potential sales tax liability exceeding Rs. 70 million, with officials questioning the plausibility of maintaining such large stock volumes in a business dealing with a perishable commodity like ice.

During proceedings, it also emerged that the complainant had filed a constitutional petition before the Sindh High Court seeking the same relief—namely, the restoration of the suspended registration—after approaching the FTO. The Ombudsman observed that both proceedings effectively sought identical outcomes.

In light of this, the FTO ruled that the matter had become sub judice, thereby falling outside its jurisdiction under Section 9(2)(a) of the FTO Ordinance, 2000, which bars the office from intervening in cases pending before a competent court. Consequently, the complaint was closed without further investigation, and the case record was consigned. The decision reinforces the Tax Ombudsman’s stance that while genuine grievances are addressed, frivolous or parallel litigations will not be entertained, ensuring that the forum is not misused and remains focused on legitimate taxpayer relief. FTO Office demonstrates Zero Tolerance in cases where any sort of tax fraud has been detected by tax authorities or under investigation at FBR.

Copyright Business Recorder, 2026

In a letter addressed to FBR Chairman Rashid Mahmood Langrial, PTBA President Sh Ahsan Ul Haq and General Secretary Tahir Mahmood Butt highlighted the potential adverse economic impact of recovery measures initiated following recent judgments of higher courts under Sections 4C and 4B of the Income Tax Ordinance, 2001, along with the imposition of default surcharge by field formations.

“We, in our capacity as a representative body of district tax bars across the country, respectfully draw your attention to the significant legal and practical implications arising from recent judgments delivered by the Federal Constitutional Court and the Islamabad High Court concerning Sections 4C and 4B of the Income Tax Ordinance, 2001,” the letter stated.

The PTBA observed that the Federal Constitutional Court has upheld the constitutional validity of the Super Tax, declaring it intra vires the Constitution. Meanwhile, the Islamabad High Court, in writ petitions No. 1125 and 1126 titled C M Pak Limited, ruled that the liability arising under Section 4C is independent in nature. As such, it does not allow adjustment of withholding tax or refunds under any provision of the Ordinance.

The association pointed out in the letter that, following these judgments, field formations have started issuing notices for the levy of default surcharge under Section 205 of the Ordinance. In cases of non-compliance, proceedings are being finalized under Sections 205 and 137.

“In these circumstances, a serious legal question arises: if the liability under Section 4C has been declared independent and standalone, with no provision for adjustment of withholding taxes or refunds, then on what legal basis are penal and recovery provisions being invoked, while relief provisions are being disregarded?” the letter questioned.

The PTBA argued that such an approach creates an apparent inconsistency in the application of the law. If the liability under Section 4C is treated as wholly independent for denying adjustments and refunds, then the simultaneous application of penal and recovery provisions under Sections 205 and 137 requires clear legal justification and must be enforced in a fair, uniform, and sustainable manner.

Referring to a meeting held at the FBR Headquarters on February 27, 2026, attended by representatives of PTBA, Lahore Tax Bar Association, and Karachi Tax Bar Association, the letter recalled that a consensus had been reached to implement court judgments in a facilitative and amicable manner, particularly regarding refunds and withholding taxes.

However, the subsequent judgment of the Islamabad High Court declaring Super Tax an independent levy, thereby disallowing adjustment of withholding taxes or refunds, came as a shock to stakeholders, the PTBA stated.

The association further observed that while all stakeholders share responsibility, the tax authorities, being in a stronger position, have an undue advantage that may lead to an unfavourable interpretation of statutory provisions. The PTBA representatives requested the FBR chief that, in line with the earlier understanding between the two sides, to direct the field formations to refrain from charging default surcharge, in order to ease the burden on taxpayers and encourage voluntary contribution to the national exchequer.

Copyright Business Recorder, 2026

According to official findings, unidentified individuals gained illegal access to the taxpayer’s IRIS profile by misusing login credentials and revised the return for October 2025.

Through this activity, fake supplies amounting to Rs. 415.6 million were introduced, carrying a GST impact of Rs. 74.8 million and effectively consuming the entire carry-forward input tax credit of the taxpayer.

The affected party approached the FTO seeking an independent inquiry into the hacking incident, removal of fake invoices, restoration of the input tax credit, and strict legal action against those responsible. Upon examination of the supply chain trail and investigation reports, it emerged that the fraudulent activity was part of a broader, organised network.

The findings indicate possible facilitation by some individuals associated with the Federal Board of Revenue (FBR) and Pakistan Revenue Automation Limited, suggesting that such manipulation could not have been carried out without insider access to the sensitive taxpayer data.

Investigators observed that cybercriminals exploited information related to dormant and blacklisted taxpayers, as well as entities holding substantial accumulated input tax credits to introduce fake transactions into the system. The fraudulent supply chain was traced across multiple jurisdictions, and several beneficiaries have already been identified for legal proceedings by relevant field formations in Karachi, Lahore, Multan, Quetta, and Islamabad.

The FTO noted that since the fraudulently adjusted input tax credit has already moved through the supply chain, its immediate restoration would be premature until the investigation is completed and the main perpetrators are identified.

The Ombudsman declared the unauthorised use of login credentials and revision of tax records as maladministration under the relevant provisions of the law and issued key directives to address the matter. The Directorate General of Intelligence and Investigation (Inland Revenue) has been tasked with conducting a comprehensive probe to identify all beneficiaries and trace those involved in the cyber fraud, including individuals within or outside FBR and PRAL, using digital evidence such as IP addresses. Chief Commissioners of major tax offices have been directed to extend full cooperation in identifying beneficiaries throughout the supply chain and ensuring coordinated enforcement action.

In addition, the IRS Business Process Re-engineering (BPR) team has been instructed to recommend immediate system upgrades, including stricter controls over changes in taxpayer credentials such as CNIC, mobile numbers, and biometric verification, along with enhanced supervisory oversight to prevent misuse of IDs and passwords.

The FBR has further been directed to submit a comprehensive compliance report within 60 days, detailing the progress of the investigation and measures taken to prevent recurrence.

The case highlights serious vulnerabilities in the digital tax infrastructure and highlights the urgent need for stronger cybersecurity mechanisms and internal accountability to safeguard both taxpayers and public revenue.

Copyright Business Recorder, 2026

A two-member bench, headed by Chief Justice Amin-ud-Din Khan, on Wednesday heard appeals arising from judgments of the Sindh, Lahore, Peshawar, and Islamabad High Courts concerning the validity of the tax imposed through the Finance Act, 2022.

Under Section 7E, immovable properties owned by a taxpayer (excluding the first property), if not rented out, or self-owned business premises, or self-owned agricultural land, are deemed to generate rental income equal to 20% of their FBR value. This “deemed rent” is then taxed at the rate of 5%, effectively resulting in an annual tax of approximately 1% of the property’s FBR (capital) value.

Raashid Anwer, representing taxpayers, contended that the levy is, in essence, a tax on the capital value of assets and thus falls outside the legislative competence of the federation. He submitted that the core issue before the Court was whether the tax could be sustained under Entry 50 of the Fourth Schedule to the 1973 Constitution— which relates to “taxes on the capital value of the assets, not including taxes on immovable property” — or under Entry 47, which pertains to “taxes on income other than agricultural income.” He submitted that the impugned levy could not be justified under either Entryand, therefore, was unconstitutional.

Anwer further argued that the tax could not fall under Entry 50 because, after the 18thAmendment, Entry 50, which previously read as “Taxes on the capital value of the assets, not including taxes on capital gains on immovable property,” had been amended to delete the words “capital gains on.”

He contended that this amendment reflected a clear constitutional intent to exclude immovable property from the federation’s taxing powers in respect of capital value. In support of this position, reliance was placed on FBR Circular No. 3 of 2012, which, according to the counsel, acknowledged that the federation lacked the authority to impose a tax on the capital value of immovable property. He maintained that Section 7E, in the pith and substance, amounts to such a tax and is therefore ultra vires the Constitution.

Anwer further argued that the levy could not be sustained under Entry 47, as it seeks to tax properties that generate no actual income. He pointed out that rented properties and other income-generating assets are excluded from the ambit of Section 7E, thereby underscoring that the provision targets assets that do not yield income.

Relying on the Supreme Court’s judgment in the Elahi Cotton case, he submitted that while the Court had upheld the constitutionality of turnover tax, it had done so in the context of Entry 52 of the Fourth Schedule, and not Entry 47. He emphasized that the judgment does not support the proposition that anything may be arbitrarily deemed to be income. Rather, it permits deeming provisions only where there exists an underlying economic activity.

Copyright Business Recorder, 2026

In a statement issued here from his office on Wednesday, Muzzammil Aslam stated that as a result of these two measures, Khyber Pakhtunkhwa will face a shortfall of 120 billion rupees in its receipts.

He further said that Khyber Pakhtunkhwa has spent more than 10 billion rupees on flood relief, 15 billion rupees on the rehabilitation of Internally Displaced Persons (IDPs), and approximately 10 billion rupees on fuel compensation for motorcyclists, farmers, and buses.

Muzzammil Aslam added that all these financial pressures have reached around 150 billion rupees for Khyber Pakhtunkhwa alone, and the burden of expenses is still ongoing.

Copyright Business Recorder, 2026

Jam Kamal chaired a meeting with a delegation of the Pakistan Dairy Association (PDA), led by CEO Dr Shehzad Amin. The meeting was also attended virtually by Rana Ihsaan Afzal, Coordinator to the Prime Minister on Commerce, along with senior officials from the Ministry of Commerce, according to an official statement on Monday.

The discussion focused on the challenges facing Pakistan’s dairy sector, particularly regarding tariff and taxation issues, as well as improving productivity, genetic quality, and the formalisation of the sector.

Kamal emphasised that enhancing the genetic quality of dairy breeds and guiding farmers toward a formalised business model is critical for the sector’s development.

He said that without proper genetic direction, farmers cannot achieve the desired milk yields and that structured support, regulation, and farmer education are essential to transform the sector.

Milk producer Ghani Dairies plans to raise Rs2.5bn via IPO

The association pointed out that the current GST on dairy products is 18%, while globally, and even in neighbouring countries, such products often enjoy zero or minimal taxation.

In response, Jam Kamal asked the association to submit proposals for reducing the GST from 18% to 10% and asked Rana Ihsaan Afzal to take the lead in working closely with the association to prepare a comprehensive proposal.

The minister also stated that he would write letters to the chief ministers and all relevant ministers to ensure coordination and support for implementing these proposals and improving the formalisation of the dairy sector across the country.

The association presented additional proposals, including the provision of financial support and banking facilities for farmers, the implementation of regulatory measures to ensure only pasteurised or properly packaged milk is sold, and the initiation of pilot programs in major urban centres to transition farmers into formal business practices.

They also highlighted the need for cross-breeding programs and farmer training to enhance genetic quality and improve overall milk production.

Jam Kamal welcomed these proposals and stressed that a comprehensive plan should be prepared for timely implementation, ensuring that Pakistan’s dairy sector achieves higher productivity, better regulatory compliance, and contributes more effectively to the country’s economy.

This increase of Rs. 6 billion reflects a strong and sustained improvement in tax compliance, enhanced enforcement, and continued expansion of the service sector tax base across the province.

According to figures released by KPRA’s media wing, the Authority generated a total revenue of Rs. 38.80 billion during the first nine months of the ongoing financial year. This includes Rs. 34.60 billion from Sales Tax on Services and Rs. 4.20 billion from Infrastructure Development Cess (IDC).

The overall revenue collection performance of Authority remained stable, with strong gains in Sales Tax on Services effectively reinforcing KPRA’s revenue stream during the ongoing financial year.

Director General (DG) KPRA, Miss Irum Naz, appreciated the performance of the Authority’s officers and staff, attributing the growth in Sales Tax on Services to effective planning, sustained enforcement, and institutional commitment.

“The consistent growth in Sales Tax on Services during the first nine months of the financial year reflects our strategic focus, improved compliance, and the dedicated efforts of KPRA’s workforce,” she said.

“We are confident that with continued focus and a data-driven approach, the Authority will achieve its annual revenue targets.”

The Director General also expressed gratitude to taxpayers for their trust and cooperation, terming it essential for sustained growth.

She further acknowledged the support and guidance of the Chief Minister Khyber Pakhtunkhwa Muhammad Sohail Afridi and the Provincial Minister for Finance, Mr. Muzzammil Aslam noting that their leadership has played a key role in strengthening revenue mobilization efforts in the province.

Copyright Business Recorder, 2026

The directions were issued on a complaint regarding non-adjustment of pending income tax refunds of previous tax years against tax liability for Tax Year 2025.According to the complaint, the taxpayer had approached the tax department well within time for adjustment of refund claims relating to Tax Years 2017, 2018, 2019, 2020 and 2023, but the matter remained unattended due to departmental delay and inaction, forcing the taxpayer to seek relief from the Ombudsman.

After examining the case, the FTO observed that refund claims for Tax Years 2017 to 2020 had not yet attained finality, as their admissibility would be determined only after implementation of the relevant appellate orders.

However, in respect of Tax Year 2023, the Ombudsman noted that the taxpayer had filed a refund application amounting to Rs44.673 million, which the department was legally required to decide within the prescribed time. Despite this statutory obligation, the department failed to dispose of the claim.

The Ombudsman further observed that when the taxpayer subsequently requested adjustment of the claimed refund against tax liability for Tax Year 2025, the department again failed to act. It was only after issuance of notices by the FTO Secretariat that the concerned tax office moved and initiated proceedings on the refund application.

In its findings, the FTO noted that while the department often demonstrates “phenomenal quickness” in adjusting refunds against tax demands raised by itself, the same legal facility is frequently denied to taxpayers despite repeated requests.

The Ombudsman held that such conduct amounted to arbitrary treatment, delay and maladministration within the meaning of the FTO Ordinance, 2000.

The FTO has, therefore, recommended that RTO Islamabad immediately dispose of the pending refund claim for Tax Year 2023 strictly in accordance with law.

The Ombudsman has also directed Member Inland Revenue (Operations) to issue instructions to all field formations that coercive recovery of tax demand should only be initiated after disposal of pending refund claims and adjustment requests. The FBR has further been directed to submit a compliance report within 60 days.

Copyright Business Recorder, 2026

To discuss the strategy and review measures for enhancing revenue from the services sector, a meeting of the PRA was presided over by Chairman of the Authority, Moazzam Iqbal Sipra. During the meeting, a detailed briefing was given to the chair on expanding the tax net and bringing additional service sectors into taxation. The chairman issued directions to ensure registration of unregistered businesses and to promote e-filing and e-payment systems on a priority basis.

According to the PRA officials, various proposals were reviewed to make the tax system more transparent and user-friendly through digitalization and automation. The meeting was further briefed on awareness campaigns aimed at promoting tax compliance among the public. It was decided to soon launch a dedicated WhatsApp number at PRA to facilitate easy and prompt redressal of taxpayers’ complaints, the officials added.

The Chairman PRA emphasized that effective monitoring, inspection and improved enforcement are essential to curb tax evasion. He reiterated that increasing revenue without placing an unnecessary burden on the business community remains a top priority of the government of Punjab. He further stated that efforts to enhance revenue through data integration with government departments will be expanded. Commissioners, assistant commissioners and enforcement officers from all districts participated in the meeting via video link.

Copyright Business Recorder, 2026

BMP Chairman and former FPCCI President, Mian Anjum Nisar, said that Pakistan’s recent fuel price hikes—ranging between 63 percent to over 75 percent in petrol and diesel—stand in sharp contrast to regional economies, where increases have remained limited to just 2 percent to 10 percent. He noted that India, Bangladesh, China, and Vietnam have adopted calibrated pricing strategies, shielding their industries through subsidies, tax adjustments, and gradual revisions, while Pakistan has imposed a disproportionately heavy burden on its economy.

“This policy divergence is not just alarming—it is economically damaging,” he said. “At a time when our exporters are already struggling with high energy costs and declining global demand, such an excessive increase in fuel prices is effectively pricing Pakistan out of international markets.”

Mian Anjum Nisar emphasized that petrol prices reaching around Rs458 per litre—driven largely by a petroleum levy exceeding Rs160 per litre—reflect a fiscal approach overly reliant on indirect taxation. While acknowledging the constraints posed by the IMF programme, he warned that excessive dependence on fuel taxes could choke economic activity rather than stabilize finances.

“Fuel is the backbone of all economic sectors—transport, manufacturing, agriculture, and services. When its cost rises sharply, the entire economic chain is disrupted,” he explained. “This is not just a price increase; it is a structural shock.”

He pointed out that logistics and transportation costs in Pakistan are already among the highest in the region. The latest fuel hikes will further inflate freight charges, increase input costs for manufacturers, and reduce profit margins across industries. Export-oriented sectors, particularly textiles and value-added segments, are likely to face significant setbacks as global buyers shift to more cost-competitive markets.

“Our regional competitors are gaining ground precisely because their governments are protecting industry from such shocks,” he said. “Bangladesh and Vietnam, for example, continue to offer stable energy pricing, enabling their exporters to secure long-term contracts at competitive rates.”

The BMP chief also expressed concern over the impact on small and medium enterprises (SMEs), which form the backbone of Pakistan’s industrial base. “Unlike large corporations, SMEs do not have the financial cushion to absorb sudden cost increases. Many will be forced to scale down operations, reduce workforce, or shut down entirely,” he warned.

In agriculture, the implications are equally serious. Diesel-powered machinery, including tractors, tube wells, and harvesters, will become significantly more expensive to operate. This, he noted, will drive up the cost of food production, contributing to inflationary pressures and exacerbating food security concerns.

Mian Anjum Nisar further highlighted the paradox of over-taxation, cautioning that higher fuel taxes may not yield the expected revenue gains. “There is a threshold beyond which increased taxation leads to reduced consumption and, ultimately, lower revenue collection. As economic activity slows, fuel demand declines, undermining the very fiscal objectives the government seeks to achieve,” he said.

He also criticized the distortionary impact of current pricing policies, particularly the cross-subsidization between petrol and diesel. “Such measures disrupt market signals and create inefficiencies. Instead of promoting rational consumption, they redistribute financial stress within an already fragile system,” he added.

On the social front, the BMP chairman warned of widespread repercussions. Fuel price increases, he said, are inherently regressive, disproportionately affecting lower and middle-income groups. The ripple effects—higher transport fares, increased food prices, and rising utility costs—will erode purchasing power and heighten economic hardship.

“This is not just an economic issue; it is a social challenge,” he said. “Persistent inflation and declining real incomes can lead to public discontent and instability.”

Mian Anjum Nisar urged the government to adopt a more balanced and sustainable fiscal strategy. He called for immediate relief measures, including a reduction in the petroleum development levy (PDL), rationalization of energy tariffs, and targeted support for export-oriented sectors.

He stressed that fiscal consolidation should focus on expenditure rationalization rather than excessive revenue extraction. “There is significant room to cut non-productive government spending, reduce administrative inefficiencies, and improve fiscal discipline,” he noted.

The BMP chief also reiterated the need to broaden the tax base by bringing untaxed sectors—particularly retail and agriculture—into the formal economy. “The burden cannot continue to fall on the already documented sectors. Structural reforms in taxation are essential for long-term sustainability,” he said.

Additionally, he emphasized the importance of energy sector reforms, including reducing transmission losses, curbing theft, and improving distribution efficiency. “Without addressing these systemic issues, price hikes will only transfer inefficiencies to consumers and businesses,” he warned.

He also advocated for a phased and predictable fuel pricing mechanism to avoid sudden shocks. “Gradual adjustments, combined with targeted subsidies for vulnerable groups, can help balance fiscal needs with economic stability,” he suggested.

Copyright Business Recorder, 2026

In this regard, the Federal Board of Revenue (FBR) has issued draft amendments through which if confirmed, would mean that non-resident persons that have more than 50,000 subscribers or followers in a tax year in Pakistan or more than 12,250 subscribers / followers in a quarter on social media shall have significance economic presence in Pakistan in terms of Section 101(3B)(b). This means their income to the extent it is generated by interaction with Pakistani users shall be Pakistan source income. These draft amendments may also apply to non-resident persons with lesser followers but that have a higher reach / view count than 50,000 views per post or video in Pakistan in a tax year or more than 12,250 views in a quarter, a tax expert explained.

The FBR has made it mandatory for both resident and non-resident persons, deriving income from interaction with users in Pakistan through social media platforms, to pay quarterly advance tax and also file special income tax return.

In this connection, the FBR has issued SRO.545(i)/2026 and in case of local Pakistanis, the FBR has issued an SRO.546(I)/2026 here on Thursday.

The Federal Board of Revenue (FBR) Thursday issued special procedure for taxation of persons earning income from remunerative social media content.

The “Revenue per mille” means the revenue generated per 1000 views on the video shared on Youtube. For the purpose of this Special Procedure, it shall be taken as Rs 195 and is subject to revision from time to time, FBR added.

A tax expert clarified that the FBR assumes that a YouTuber earns about Rs. 195 for every 1,000 views on their videos. This estimate is used as a benchmark to calculate taxable income, especially if exact earnings are not available.

The rate can change in the future if the FBR updates its formula. This helps the tax authority determine how much income to include when calculating taxes on YouTube earnings.

Under the new regulations, every non-resident person deriving income from interaction with users in Pakistan through social media platforms to the extent such income constitutes Pakistan-source income.

The FBR’s rules shall apply for the purpose of section 99C of the Income Tax Ordinance. 2001 to provide special procedure for computation of income of non-resident persons earning income from remunerative social media content.

The FBR has also specified procedure for calculation of Income from remunerative Social Media Content. The minimum income of a person from remunerative social media content shall be calculated as per the prescribed formula.

The threshold for number of users shall be number of users to qualify for “Systemic and Continuous Soliciting of Business Activities or

Engaging in Interaction through Digital Means” would be exceeding 50,000 users during a tax year or twelve thousand two hundred and fifty users during a quarter.

This may include persons with more than 50,000 subscribers or followers, and persons with lesser followers / subscribers but with greater engagement count with the viewers.

Every person under this special procedure shall pay advance income tax calculated by applying the procedure given in rule -l9M and rule-19N above for one quarter and shall be payable or recoverable as the case may be.

The declaration of such income shall be made in a special part of Income Tax Return for each tax year.

Where the declaration of income is less than the amount calculated in rule -19M and rule-19N, the relevant commissioner may rectify this error omission or commission in the return and proceed to recover the amount due from the taxpayer as per the provisions of the income Tax Ordinance, 2001.

In case of local Pakistanis, the FBR has issued an SRO.546(I)/2026 here on Thursday to notify special procedure for taxation of persons earning income from remunerative social media content.

The Federal Board of Revenue (FBR) new taxation procedure will be applicable on every resident person deriving income from interaction with users in Pakistan through social media platforms.

The “Social media platform” means an internet-based service whose primary purpose is to enable users to interact with other users and share user-generated content, where the economic value of the service arises from user participation, network effects and the monetization of user engagement or user data.

Revenue per mille” means the revenue generated per 1000 views on the video shared on Youtube. For the purpose of this Special Procedure. it shall be taken as PKR 195 and is subject to revision from time to time.

According to the new regulations, the rules shall apply for the purpose of section 99C of the Income Tax Ordinance 2001 to provide special procedure for computation of income of resident persons earning income from remunerative social media content.

Every person under this special procedure shall pay advance income tax calculated by applying the procedure given in rule-l3ZK and rule-132L above for one quarter and shall be payable or recoverable, as the case may be. as per provisions of section 147 of the Income Tax Ordinance. 2001.

The declaration of such income shall be made in a special part of Income Tax Return for each tax year.

Where the declaration of Income is less than the amount calculated in rule- l3ZK and rule-132L, the relevant commissioner may rectify this error of omission or commission in the return and proceed to recover the amount due from the taxpayer as per the provisions of the Income Tax Ordinance. 2001, FBR added.

Copyright Business Recorder, 2026

According to the latest data, the Federal Board of Revenue (FBR) recorded a massive shortfall of Rs 331 billion during the first half of fiscal year 2025-26. The FBR collected Rs 6.159 trillion against a projected target of Rs 6.490 trillion. This gap was primarily driven by lower domestic sales tax and income tax receipts, with sales tax alone falling Rs 172 billion short of its goal.

Experts point out that sectors such as real estate, tobacco, pharmaceuticals, tea, and tyres continue to operate largely outside the documented framework, shifting the tax burden onto a narrow base of compliant taxpayers.

The impact is most visible in the tobacco sector, where illicit products account for more than half the market, costing the national exchequer over Rs 415 billion annually. While the government’s budget for FY26 relies on Rs 400 billion through enhanced enforcement, the weak implementation of the Track and Trace System across industries serves as a clear indicator of limited institutional resolve.

Without a shift from isolated retail checks to coordinated, nationwide enforcement at the production and distribution levels, experts warn that the shortfall could continue to widen.

Macroeconomic analyst Osama Siddiqui emphasized that a sustainable fiscal future depends on shifting policy away from repeatedly taxing the compliant, terming the Rs 330 billion shortfall a wake-up call that- technology like Track and Trace- cannot work in a vacuum.

Copyright Business Recorder, 2026

During a meeting of the Federal Ministry of Housing and Works, chaired by the PM, officials presented the ministry’s strategic roadmap, outlining efforts to overhaul the housing sector and strengthen regulatory oversight.

The officials said that reforms are being introduced to streamline the tax structure for the construction industry, a step considered crucial for attracting investment and supporting large-scale housing initiatives.

READ MORE: Govt housing scheme expected to revive economic activities in construction sector

In his remarks, the PM emphasised that expanding housing opportunities for low-income groups, promoting affordable housing projects, and incentivising private sector participation remain central to the government’s agenda.

“Practical measures must be taken to effectively provide house finance facilities to the common man,” he said, signalling a continued focus on inclusive housing policies.

Officials also briefed the PM on a plan to construct homes for low-income families through public-private partnerships.

The proposed establishment of a Real Estate Regulatory Authority was highlighted as a measure to regulate and monitor the real estate and housing sectors more effectively.

Regarding housing finance, officials noted that discussions are continuing among the Ministry of Finance, the FBR, the Securities and Exchange Commission (SECP), and provincial housing ministries, particularly on the development of a Real Estate Investment Trust to mobilise private sector investment in housing.

The meeting was attended by Federal Minister for Finance Muhammad Aurangzeb, Federal Minister for Housing and Works Riaz Pirzada, Federal Minister for Information Technology Shaza Fatima, Federal Minister for Law and Justice Azam Nazir Tarar, Federal Minister for Economic Affairs Ahad Cheema, Prime Minister’s Adviser on Inter-Provincial Coordination Rana Sanaullah, Minister of State for Finance and Railways Bilal Azhar Kiani, along with other senior officials.

Copyright Business Recorder, 2026