The National Tax Council (NTC) has decided to present amendments to the Agriculture Income Tax (AIT) legislation in provincial assemblies by January 1, 2025, after failing to reach a consensus on harmonizing Goods and Services Tax (GST) rates and unifying property taxes under a single regime.
The council also aims to finalize a draft of the negative list for GST on services by the same deadline, with implementation planned for July 1, 2025.
During a meeting chaired by Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb at the Finance Division, key federal and provincial stakeholders discussed critical tax reforms and harmonization efforts. The meeting was held in the context of the recently signed National Fiscal Pact, which emphasizes maximizing tax potential in under-taxed sectors such as real estate, property, and agricultural income.
The Federal Board of Revenue (FBR) highlighted progress on unified GST returns for Cellular Mobile Operators (CMOs), though issues with input adjustments remain unresolved. On AIT legislation, the Ministry of Finance noted that the International Monetary Fund (IMF) has not raised concerns about Punjab’s amended AIT law, which lacks a specified tax rate.
Sindh’s Revenue Board (SRB) has prepared its draft amendment bill, but its presentation to the provincial assembly will be a political decision. Meanwhile, Khyber Pakhtunkhwa and Balochistan have committed to tabling their amendments by the January 2025 deadline.
The NTC discussed transitioning GST on services from a positive list to a negative list approach to combat tax evasion. The first draft of the negative list will be presented by January 2025, with implementation set for FY2025-26. However, sharp differences persist between the FBR and provinces over the negative list, as the FBR fears potential encroachment on federal tax domains.
The council also deliberated on introducing unified GST rates for goods and services, with the NTC’s executive committee tasked with finalizing the modalities. The reforms aim to collectively increase revenues from corporate taxes in agriculture and GST on services, while expanding provincial tax efforts in new areas.
The NTC plans to expand its terms of reference to include property tax reforms, with necessary legal and administrative changes to be implemented. The council emphasized the need for a common approach to property taxation, narrowing the tax compliance gap, and fostering collaboration among federal and provincial stakeholders.
An official statement from the Federal Ministry of Finance highlighted the importance of cohesive policy implementation, capacity building, and stakeholder engagement to achieve sustainable tax reforms. The meeting was attended by Ali Parvez Malik, Minister of State for Finance & Revenue; Mian Mujtaba Shuja-ur-Rehman, Finance Minister of Punjab; Muzzamil Aslam, Finance Minister of KP; Mir Shoib Nausherwani, Finance Minister of Balochistan; the Chairman of the FBR; chairmen of provincial revenue boards; and finance secretaries from both federal and provincial levels. Experts from the World Bank and senior officials from the Finance Division also participated.
The Federal Minister for Finance and Revenue reiterated the government’s commitment to fostering collaboration for a unified and efficient tax framework, emphasizing the need to unlock the full revenue potential of under-taxed sectors.
