The Senate Standing Committee on Finance has recommended increasing the threshold for imposing restrictions on economic transactions such as buying property, new vehicles, and investing in securities from the proposed 130 percent to 500 percent, based on the declared income in the filed tax returns.
The recommendation came during the discussions on the Finance Bill 2025-26, where the Federal Board of Revenue (FBR) had initially proposed a 130% threshold. However, senators across political lines have expressed concerns and called for a higher threshold of 500%.Â
The panel discussed potential impacts on transactions like property purchases and bank account operations for individuals deemed ineligible for such activities.
The committee also recommended a one percent tax on cash withdrawals from banks, alongside the inclusion of recreational clubs in the tax net and imposing taxes on online tuition and coaching services.
On salary tax slabs, the FBR had suggested lowering the tax rate for income between Rs600,000 to Rs1.2 million from 5 percent to 2.5 percent, a change made after the federal cabinet raised the proposal from 1 percent to 2.5 percent to fund the 10 percent salary increase for public sector employees.
The committee meeting, chaired by Senator Saleem Mandviwalla, addressed concerns over the newly proposed Section 114C, which would restrict economic transactions for individuals whose declared assets fall below the set threshold. FBR Chairman Rashid Mehmood Langrial and Member Tax Policy Inland Revenue Dr. Najeeb Ahmed explained that the threshold would limit individuals from making purchases or operating bank accounts unless they met the criteria based on their declared worth.
Senator Faisal Vawda expressed concerns that the policy could harm the property market, urging a reduction in the tax rate for property transactions. Senator Mohsin Aziz of PTI also echoed the call for a higher threshold, suggesting 500 percent as a more reasonable limit.
Finance Minister Muhammad Aurangzeb assured the committee that the government would review and increase the threshold for imposing transaction restrictions. Additionally, the Finance Bill includes a new tax on recreational clubs, which were previously exempt, with taxes applied to clubs earning more than their expenditures.
The committee raised concerns over FBR’s decision to disallow 10 percent for purchases from non-registered suppliers, arguing it could discourage competition due to the low number of registered suppliers in the country.
The committee also recommended that the wealth threshold for “Eligible Persons” should be raised from the proposed 130 percent to 400 percent of the previous year’s declared income.
