ISLAMABAD: Finance Minister Muhammad Aurangzeb, Wednesday, presented revised procedure for penalty, arrest and imprisonment to the persons committing tax fraud with new safeguards for the business community to avoid misuse of powers by the Federal Board of Revenue (FBR).
The Senate Standing Committee on Finance and Revenue, under the chairmanship of Senator Saleem Mandviwalla, held its fifth consecutive session to deliberate on the Finance Bill 2025 and the Annual Budget Statement laid before Parliament.
Aurangzeb informed that on special directive of Prime Minister Shehbaz Sharif, four safeguards have been placed to ensure that powers to arrest must not be misused by the tax officials of the FBR.
Arrest for tax fraud: Senate panel for defining a threshold
Aurangzeb stated that the government would incorporate four major safeguards for allowing arrests on tax frauds in order to avoid misuse of powers. In the first pre-requisite, the minister said that the accused of tax fraud would be arrested where there was a fear of his escape, but it would be done with the approval of three members of the Board, in grade 21, notified by the FBR.
The tampering of proof could be the second reason, and the third reason could be tax fraud amounting to Rs50 million. The fourth condition of the arrest, he said, would only be possible if someone received three notices but not bothered to respond.
The Senate Standing Committee on Finance has unanimously recommended for approval and collection of GST from erstwhile FATA/PATA areas and refrained from backing out at the time of approval of the budget from the Parliament.
Chairman of the Finance Committee objected that the FBR cannot give sales tax exemption to only PIA. This is a discriminatory exemption and would be challenged in courts once become law. The proposal should cover all leased aircrafts and not be limited to one airline.
The committee discussed a range of critical recommendations and policy matters:
The committee strongly recommended withdrawing the proposed 18 per cent GST on solar panels. Members observed that ahead of the budget, certain stakeholders had imported and dumped solar equipment in anticipation of the tax hike. The chairman emphasized the discriminatory nature of the move, saying, “The committee rejects the sudden imposition of GST on solar imports and urges immediate withdrawal.”
A seven per cent pension increase for retired government employees was proposed. Proposals were put forward to extend the duration of family pensions.
The Higher Education Commission (HEC) was recommended for additional funding allocations.
The committee expressed serious concern over the increase in GST from 12 per cent to 18 per cent on small vehicles, including 850cc cars. Chairman Mandviwalla called the 18 per cent sales tax on a Rs3 million vehicle “unfair,” a sentiment echoed by several senators. Proposals were discussed to moderate the tax to 14 per cent or 15 per cent instead. Senator Shibli Faraz criticised the inequity, noting that while tax relief is being extended to certain regions, small car owners continue to face high taxation.
FBR Chairman Rashid Mehmood Langrial said the IMF placed a principle that wherever the reduced GST rate was five percent, it would go up to 10 percent, and any rate of over five percent would go to the standard rate of 18 percent.
From the next fiscal year, iron scrap importers will be obligated to sell only to registered manufacturers. Officials said this measure aims to eliminate the misuse of “flying invoices” and commercial manipulation in scrap trade.
The committee also held into consideration the recommendations put forward by Senator Farooq Hamid Naek related to tax fraud and its offences and punishments.
Senator Mandviwalla praised the overall conduct and participation of members in the budget discussions, highlighting that the nature of engagement this year signifies a transparent and participatory process reflective of public will. The committee witnessed enthusiastic participation from members of the Senate.
Senators Shibli Faraz, Anusha Rahman Ahmad Khan, Faisal Vawda, Muhammad Abdul Qadir, Mohsin Aziz, Kamran Murtaza, Manzoor Ahmad, Agha Shahzaib Durrani, Ahmed Khan, Zarqa Suharwardy Taimur, Waqar Mehdi, Jam Saifullah Khan, Irfan ul Haq Siddique, Khalida Ateeb and other members attended the meeting.
Copyright Business Recorder, 2025
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