NA panel endorses tax on social media earnings, inherited property CGT

ISLAMABAD: The National Assembly Standing Committee on Finance and Revenue on Thursday approved a proposal to impose a 5 percent withholding tax on income earned through social media platforms, while also endorsing a capital gains tax (CGT) regime on the sale of inherited properties.

The committee, which met under the chairmanship of Naveed Qamar here on Thursday, gave its nod to a series of tax measures proposed in the Finance Bill, 2026 aimed at broadening the tax base and documenting emerging income streams.

Federal Board of Revenue (FBR) officials informed the committee that earnings generated from digital platforms such as YouTube are increasing rapidly and largely remain outside the tax net.

They explained that the withholding tax would be deducted when foreign currency earnings from social media platforms are remitted through the banking system.

According to FBR officials, income generated from social media activities in Pakistan is around Rs4 to 10 billion, prompting the government to introduce a mechanism for taxing digital content creators and influencers.

Under the approved proposal, a 5 percent withholding tax will be charged on social media earnings received through banks. The tax is expected to help bring the fast-growing digital economy into the formal tax regime and improve revenue collection from online income sources, they added.

The committee also considered amendments relating to inherited properties and family settlements. FBR officials proposed the imposition of CGT on the sale of inherited properties and plots, while introducing a clear valuation mechanism to determine taxable gains.

Officials explained that the cost of an inherited property would be deemed to be its market value on the date of the original owner’s death. This benchmark would serve as the acquisition cost for calculating capital gains tax when the property is subsequently sold.

Explaining the mechanism, FBR officials said that if a plot was worth Rs8 million at the time of the owner’s death and later sold for Rs10 million, capital gains tax would be charged on the Rs2 million, the amount increases in value.

However, committee chairman Syed Naveed Qamar advised that the property’s original value should be calculated from the date ownership is formally transferred.

The committee subsequently suggested determining the real value from the date of the transfer of ownership. The committee was informed that inherited properties transferred through family settlement arrangements would be granted legal protection under the proposed framework. The valuation date for such assets would remain the date of the owner’s death, ensuring certainty in determining the property’s original cost.

Tax authorities argued that the measure would remove ambiguities surrounding inherited assets and establish a transparent system for taxing gains arising from the disposal of such properties.

The standing committee also approved a proposal requiring income tax returns to be filed exclusively through electronic means.

The FBR officials said taxpayers would be required to submit income tax returns electronically through the IRIS system, and companies would also have to file their financial statements in machine-readable formats.

The officials also noted that the FBR has largely shifted to digital filing since 2013, although manual returns were still being submitted from certain cities, including Gujranwala, but now the proposal aims to make electronic filing mandatory.

The committee endorsed another proposal of a 10 percent tax credit for digital integration.

Copyright Business Recorder, 2026