Monitoring industrial production: NA panel rejects FBR’s budget proposal

ISLAMABAD: The National Assembly Standing Committee on Finance and Revenue on Monday rejected a budget proposal of the Federal Board of Revenue (FBR) to deploy its employees to monitor the production of industries, observing that it will result into a “second National Accountability Bureau (NAB)”.

Chairman of the committee Naveed Qamar said that the authority to deploy police, Rangers and IB employees along with the FBR should not be given. This is a way to warm the pockets of FBR officers.

The FBR chairman told the committee that there is a gap of Rs6 trillion including Rs2 trillion in income tax and Rs4 trillion in sales tax and they need to fix the system.

It has been proposed that FBR and scheduled banks be obligated to share tax-related information and to use data-driven risk tools to identify high risk individual. It further proposed that the Board or Chief Commissioner be authorised to post an Inland Revenue officer at a person’s premises to monitor their production, stock, supply of goods or services.

Finance Minister Muhammad Aurangzeb stated that a lack of trust in the tax department is unsustainable. He added that the Federal Board of Revenue (FBR) is taking steps to improve its reputation and credibility.

The FBR chairman remarked that only 12 individuals had declared assets exceeding Rs10 billion, despite a population of 240 million. He further commented that one could easily find 12 such individuals just a few miles from here.

Mirza Ikhtiar Baig said that deploying police personnel in factories is a mockery of the business community.

“If the police come and sit on my factory tomorrow, I will lock it. The powers being given to the FBR will stop business in the country.”

Sharmila Farooqui said that with this proposal, the FBR will become “second NAB”.

The committee postponed the proposal to share banking information of high-risk individuals with the FBR. The FBR chairman said that if a person’s monthly income is Rs10 million and he makes transactions worth Rs100 million, then a notice should be sent to him.

FBR Chairman Rashid Langrial informed the committee that the proposal is to target suspicious bank transactions, where banks will be required to flag them. This is part of fresh measures aimed at tightening revenue collection.

He said the FBR has sought access to Suspicious Transaction Reports (STRs) from banks to detect high-net-worth individuals who remain outside the tax net or are paying less tax while having times high transactions in their bank accounts. Against the earlier provision, now the banks will flag such transactions and report to the FBR.

The committee debated broader reforms in tax compliance and enforcement.

While defending a new withholding tax on online shopping, he said it could generate up to Rs59 billion in additional revenue. He also backed the recently imposed tax on e-commerce transactions, calling it the only feasible way to tax digital vendors. “This is not a sacred text that cannot be amended. If we don’t tax them through this system, we won’t be able to at all,” he told lawmakers.

The Member Inland Revenue Policy explained that the new tax applies to local and foreign sellers using Pakistani online platforms, adding that a separate system is being developed for cross-border digital vendors. “If a foreign seller keeps goods in Pakistan, they will be taxed the same way,” he clarified.

Copyright Business Recorder, 2025