Proposal seeking abolishment of CVT on foreign assets approved

ISLAMABAD: Senate Standing Committee on Finance Sunday approved a budgetary proposal to abolish Capital Value Tax (CVT) on foreign assets to facilitate resident Pakistanis having assets abroad.

Currently Capital Value Tax is being charged on foreign movable and immovable assets of resident Pakistanis. The same is proposed to be abolished and approved by the committee.

However, the committee opposed the proposal to substantially increase Token Tax on Motor vehicles in Islamabad Capital Territory with the directive to Islamabad administration to bring a comparative chart of provinces-Islamabad on Monday (today).

READ ALSO: CVT on foreign assets may go: Rs400-500bn tax measures cleared after IMF nod

The committee also expressed serious concern over the negative impact of major reduction of import duties, additional customs duties and regulatory duties on domestic industries and local manufactures.

Secretary Ministry of Commerce informed the committee that the tariff rationalisation plan had ensured 15 percent tariff protection to the domestic industries.

On Sunday, the Senate Standing Committee on Finance and Revenue continued its detailed review of the Finance Bill 2026-27 during its second consecutive sitting at Parliament House, chaired by Senator Saleem Mandviwala. It remained engaged throughout the day in an extended session divided into two parts, conducting clause by clause scrutiny of tax measures, sales tax proposals, digitalisation reforms, petroleum-related amendments and revenue enhancement initiatives.

The meeting was attended by Finance Minister Muhammad Aurangzeb, Minister of State for Finance Bilal Azhar Kayani, Senator Sherry Rehman, Senator Talha Mahmood and Senator Shahzaib Durrani, senior officials of the Federal Board of Revenue (FBR), the Finance Division and other relevant departments.

The committee undertook a comprehensive review of the sales tax-related provisions of the Finance Bill and examined proposals aimed at broadening the tax base, improving compliance mechanisms and increasing government revenues.

One of the major decisions taken during the meeting was the approval of a new framework empowering the FBR to conduct re-audits of business records under specified circumstances. Under the approved proposal, a Commissioner will be authorised to order a re-audit in cases where irregularities are suspected, subject to prior approval from the Chief Commissioner. The registered person will be provided a full opportunity to present their position before any order is finalised.

The committee also approved provisions allowing the revaluation of inventory held by registered persons. The revised valuation of stock will be determined by a cost accountant, while inventory re-audits will be conducted only by accountants selected from an approved FBR panel. Commissioners will additionally be authorised to seek answers to specific questions from taxpayers during proceedings.

The committee also approved a series of stringent enforcement measures aimed at integrating businesses into the digital tax system and combating fake invoicing.

Under the approved proposals, businesses that fail to integrate with the digital system within the prescribed period may face fines. Repeated violations may attract additional penalties and may result in the sealing of business premises.

The committee approved strict action against fake and fictitious tax invoices. Persons issuing fake invoices may be fined an amount equivalent to the full value of the invoice. A public list of fake invoice issuers may also be published, while tax credits obtained through fictitious invoices will be automatically cancelled.

Additional measures include a 20 per cent penalty where discrepancies are detected between input tax and output tax, along with surcharges and further penalties for incorrect input tax claims.

The committee approved the proposed framework for penalties and enforcement against fake invoices.

Another significant amendment approved by the committee related to the disposal of seized goods. The committee recommended that vehicles transporting seized goods should not automatically be confiscated.

Copyright Business Recorder, 2026