The government on Monday declined to publicly disclose the exact revenue impact of tax relief measures proposed in the Finance Bill 2026-27, saying the budget package was still being discussed with the International Monetary Fund.
The issue came up during a meeting of the National Assembly Standing Committee on Finance, where officials from the Ministry of Finance and the Federal Board of Revenue shared the figures privately with committee chairman Syed Naveed Qamar as lawmakers examined the budget proposals.
According to estimates discussed in the meeting, the cumulative cost of relief measures for higher-salaried individuals, the abolition and phased reduction of super tax, and cuts in tax rates for exporters and real estate transactions is close to Rs. 360 billion in the next fiscal year.
PPP lawmakers Sharmila Faruqui and Hina Rabbani Khar pressed the government to make the figure public and asked whether the total stood at Rs. 360 billion. The committee chairman said the number appeared close to the estimate shared with him, but noted that the government was unwilling to disclose it openly while the proceedings were being covered by the media.
During the meeting, FBR member Dr Hamid Ateeq Sarwar said the Finance Bill 2026-27 comprised 11 relief measures, 10 rationalisation measures and five administrative reforms. He maintained that the exact revenue effect of the relief measures could not yet be fully determined.
Referring to the previous budget, he said the FBR had granted tax relief of Rs. 50 billion to the salaried class, but tax collection from that segment had still risen to Rs. 625 billion.
Hina Rabbani Khar criticised the advance income tax on exporters, calling it a form of extortion that offered no incentive for innovation or research.
On the proposed fixed tax scheme for retailers, FBR officials said the government wanted to bring 3.5 million small shopkeepers into the tax net. Dr Ateeq told lawmakers that in the first phase the target was around 100,000 retailers, each contributing at least Rs. 25,000 under the scheme.
He said those opting into the scheme would generally not be audited unless major discrepancies were found, such as ownership of luxury vehicles or plots in Defence Housing Authority.
On the super tax, he said the impact on higher-income earners with income above Rs. 500 million would amount to Rs. 400 billion.
Separately, the Senate Standing Committee on Finance and Revenue, chaired by Senator Saleem Mandviwalla, also continued deliberations on the budget at Parliament House.
During that meeting, Finance Minister Muhammad Aurangzeb opposed a proposal to impose a 1 per cent advance tax on exporters under the final tax regime. He said exporters would need to change their business model and move towards innovation and research to realise the country’s export potential.
The minister said issues such as the rice situation and the blockade of the Afghan border had contributed to a decline in exports, but insisted that the budget had set the economy on the path towards export-led growth.
The Senate committee also considered proposals related to tax collection in the steel sector, including options linked to electricity consumption data. It reviewed measures aimed at broadening the tax base, improving documentation and speeding up the refund process.
FBR officials told senators that around Rs. 55 billion in refunds were being processed every month and briefed them on efforts to further streamline the system.
The committee approved a proposal to tax the profit component of life insurance policies from tax year 2026, while keeping the principal amount exempt. Insurance proceeds payable on death, disability-related benefits and policies maturing after seven years will continue to remain exempt under the proposed framework.
It also endorsed the continuation of sales tax exemptions on property settlements following the death of parents. Members were informed that no sales tax would apply to property division or valuation adjustments carried out as part of inheritance settlements.
In discussions on the digital economy, the committee reviewed proposals on taxing income generated through social media and online platforms. Members stressed the need to encourage digital entrepreneurship, facilitate foreign exchange inflows and ensure an equitable tax framework for emerging sectors. The committee subsequently approved a proposal for a 5pc withholding tax on social media income.
The panel also reviewed matters relating to data integration, documentation of the economy and expansion of the tax base. The FBR informed members that efforts were under way to improve coordination with the State Bank of Pakistan for better use of financial data for tax compliance.
Lawmakers were told that data analysis had identified around 8,697 individuals with deposits of approximately Rs. 750 billion who had not paid income tax, underlining the need to expand the tax net and improve compliance.
Committee members also raised concerns over the FBR’s performance and its repeated policy changes over the years. Senator Mandviwalla said the tax machinery had conducted numerous experiments over the past decade without delivering lasting results.
During the discussion, the committee also alleged that a case involving Rs. 1.5 billion had surfaced and accused the Engineering Development Board of misusing its powers. Senators demanded the resignation of the industry secretary and warned that the matter could lead to serious legal consequences.
