The Senate Standing Committee on Finance voiced strong criticism of the Federal Board of Revenue (FBR) during its review of Budget 2026-27 proposals, with lawmakers questioning the tax authority’s performance and repeatedly changing systems.
The committee also approved several key tax measures, including the abolition of withholding tax on exporters, taxation of insurance profits and a new withholding tax on social media earnings.
The Senate Standing Committee on Finance met to review the Income Tax Ordinance clause by clause as part of the budget scrutiny process.
During the meeting, committee members raised concerns about the FBR’s performance and its frequent policy changes over the years.
Committee Chairman Saleem Mandviwala said the FBR had conducted numerous experiments during the past decade but failed to achieve lasting results.
“FBR has carried out many experiments over the last ten years. A failed system comes back again after some time,” Mandviwala remarked. He added that the tax authority often reintroduces the same system after two years despite earlier failures.
Dilawar Khan takes aim at FBR
During the discussion on reforms, Finance Minister Muhammad Aurangzeb informed the committee that the FBR was changing its operating model. Responding to the minister’s remarks, Senator Dilawar Khan sharply criticized the tax authority.
“Chairman, do not leave the matter to the FBR. They make mangoes out of dates,” he said, expressing frustration over the institution’s approach.
Concerns over falling exports
Committee members also voiced concern about the decline in Pakistan’s exports. Senator Talha Mahmood argued that Pakistan’s tax burden and electricity tariffs are higher than those in neighboring countries such as India and Bangladesh.
According to him, these factors are making Pakistani exports less competitive in international markets.
Chairman Mandviwala echoed those concerns, saying exports would improve only if unnecessary hurdles created by the FBR were removed.
Relief approved for exporters
In a significant decision, the committee approved a proposal to abolish the one percent withholding tax imposed on exporters. The move is expected to provide relief to the export sector, which has repeatedly called for lower tax burdens and improved liquidity.
Committee members viewed the measure as a step toward supporting export-oriented industries facing rising costs.
The committee also reviewed a proposal to impose withholding tax on income earned through social media platforms. FBR officials told lawmakers that many individuals are earning substantial incomes through social media activities and digital content creation.
“We want taxation on those earnings as well,” the FBR chairman informed the committee.
After detailed discussion, the committee approved a five percent withholding tax on social media earnings.
Tax on insurance profits
Lawmakers further approved a proposal to impose tax on profits earned from insurance. The committee specifically endorsed taxation measures relating to life insurance profits as part of the broader budget proposals.
The decision forms part of the government’s efforts to expand the tax base and increase revenue collection.
Representatives of the Large Scale Manufacturing (LSM) sector also appeared before the committee and raised concerns about the existing taxation framework.
Industry representatives argued that businesses are already struggling and do not have the financial capacity to become trapped in lengthy refund procedures.
They warned that double taxation could severely damage industrial activity and urged the government either to restore the previous system or allow adjustments to prevent financial strain on businesses.
“The industry will suffer if double taxation continues,” representatives told the committee.
Vawda alleges Rs1.5bn auto sector scandal
Senator Faisal Vawda drew attention to what he described as a major scandal involving the automobile sector. He alleged that a case involving Rs1.5 billion had emerged and accused the Engineering Development Board of misusing its powers.
Vawda demanded the resignation of the industries secretary and warned that the matter could lead to serious legal consequences.
“This is a straightforward case that could result in handcuffs,” he said during the meeting.
The committee continued its clause-by-clause review of Budget 2026-27 proposals and tax amendments. Lawmakers stressed the need for greater consistency in tax policy, improved support for exports and a more transparent taxation framework.
The discussions are expected to continue as parliament reviews the government’s budget proposals before final approval.
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