The Senate Standing Committee on Finance and Revenue, chaired by Senator Saleem Mandviwalla, held its fourth consecutive session here on Monday to scrutinize the Finance Bill 2025, revealing key legislative proposals and financial anomalies worth billions of rupees.
The session, held at Parliament House, was attended by Finance Minister Muhammad Aurangzeb and several prominent senators, including Farooq Hamid Naek, Syed Shibli Faraz, Anusha Rehman, Mohsin Aziz, Ahmed Khan, and others, alongside senior officials from the Federal Board of Revenue (FBR).
In a major development, the Committee proposed significant changes to the Sales Tax provisions of the bill, particularly concerning tax fraud penalties. Senator Farooq H. Naek suggested reducing penalties from Rs 10 million to Rs 5 million, halving the prison term from 10 to 5 years, and introducing procedural safeguards such as issuing three separate notices before prosecution. He also recommended that High Courts decide tax appeals within 60 days and that inquiry, investigation, and trial phases be clearly separated.
“Two years of imprisonment is already a strong message for businessmen-ten years is excessive,” Naek stated, emphasizing the need to prevent politicization of tax laws. Senator Shibli Faraz supported the notion, warning against using tax enforcement for political victimization. Senator Naek’s legal insights were widely appreciated by the Committee, with Chairman Mandviwalla lauding the depth of his clause-by-clause analysis.
The Committee also approved a new clause empowering the Audit Oversight Board to inspect audit firms, following FBR revelations that some firms merely “stamp papers” without performing actual audits. The board will now have the authority to monitor firms, while Chief Commissioners can refer cases and inspections will require prior notice.
However, a heated discussion emerged over FBR’s plan to outsource audit functions. While some members endorsed it with conditions, others raised concerns over taxpayer confidentiality.
The Committee stressed that auditors should not be penalized if misled by fraudulent submissions.
Senator Anusha Rehman urged the government to avoid over-regulating small-scale e-commerce operators-especially youth and women working from home. She suggested registration only for platforms with turnover above Rs 2 crore.
On the e-billing proposal, Senator Mohsin Aziz cited Malaysia’s phased approach and advised Pakistan to evaluate its readiness. Chairman Mandviwalla endorsed these views and called for written proposals, saying, ‘Talking will not suffice.’
The committee also reviewed the phased withdrawal of tax exemptions in FATA/PATA regions, starting with a 10% GST from the next fiscal year, eventually reaching 18%. Senator Shibli Faraz questioned the actual impact of previous tax exemptions in these regions, asking, ‘Where is the investment and employment?’
Finance Minister Aurangzeb is expected to brief the Committee on this issue in the next session. In another significant discussion, the Committee tackled the Islamabad Capital Territory (Tax on Services) 2001, suggesting the development of a ‘negative list of services’ in line with IMF benchmarks.
A startling revelation during the discussion on the Public Finance Management Act 2019 disclosed that Rs 43 billion is currently held in NADRA’s accounts, generated from surplus profits and service fees-funds that have not been transferred to the central treasury.
Senator Anusha Rehman condemned the practice, stating, ‘The government is borrowing its own money from banks and paying interest, while institutions profit off public funds.’ The Committee directed the Establishment Division and the Ministry of Finance to provide detailed accounts of all such institutions, including investments, profits earned, and the legal justification for withholding funds from the national exchequer.
In a positive development for the real estate sector, the Committee approved abolishing Federal Excise Duty (FED) on the first purchase of immovable property. The Committee will reconvene tomorrow at 2:00 PM. Finance Minister Aurangzeb is expected to provide a comprehensive briefing on tax exemptions and institutional financial practices.