The National Assembly Standing Committee on Finance and Revenue approved the inclusion of pensions exceeding Rs10 million into the tax net, with a 5% tax rate to be applied.
During the discussion, MNA Muhammad Jawed Hanif Khan raised concerns that this move might eventually lead to the taxation of all pensionable amounts in the future, specifically pointing out that higher court judges could also fall under this tax measure.
The committee also deliberated on a proposal from the Federal Board of Revenue (FBR) regarding tax deductions following favorable High Court decisions. Members from PPP and PTI opposed the FBR’s proposal, arguing that it infringed on the taxpayer’s right to appeal, as the FBR should not immediately deduct funds from the taxpayer’s account after a favorable court ruling.
FBR Chairman Rashid Mahmood Langrial attempted to defend the proposal, stating that the tax amounts had been verified in multiple forums, and once the case was decided in favor of the FBR, the tax funds were secured. However, committee members insisted that taxes should only be deducted after all appeal processes, including the Supreme Court of Pakistan, had been exhausted.
The committee instructed the FBR to reconsider the proposal and present a revised draft. Should the proposal remain unchanged, the committee indicated it would reject the provision in the Finance Bill.
Additionally, the committee approved amendments in the Income Tax Seventh Schedule that provide special treatment for the banking sector. The FBR’s proposed amendments aim to disallow banks from incorporating certain expenses, such as rent payments for bank buildings and advances on Non-Performing Loans (NPLs), into their tax calculations.
