Senate panel approves abolition of capital value tax on foreign assets of resident Pakistanis

The Senate Standing Committee on Finance and Revenue, chaired by Senator Saleem Mandviwala, on Sunday approved a proposal to abolish Capital Value Tax (CVT) on foreign movable and immovable assets owned by resident Pakistanis during its clause-by-clause review of the Finance Bill 2026-27 at Parliament House.

Capital value tax is currently imposed on foreign assets held by resident Pakistanis. Its proposed abolition is intended to facilitate Pakistanis who own assets abroad.

As per reports, the committee, however, opposed a proposed increase in token tax on motor vehicles registered in the Islamabad Capital Territory.

It directed the Islamabad administration to submit a comparative chart of token tax rates applicable in Islamabad and the provinces for further consideration.

The committee also raised concerns about the impact of proposed reductions in customs duties, additional customs duties and regulatory duties on domestic manufacturers.

The secretary of the Ministry of Commerce informed the committee that the tariff rationalisation plan provided 15% protection to local industries.

The meeting was attended by Finance Minister Muhammad Aurangzeb, Minister of State for Finance Bilal Azhar Kayani, Senator Sherry Rehman, Senator Talha Mahmood and Senator Shahzaib Durrani.

Senior officials from the Federal Board of Revenue, Finance Division and other relevant departments also participated.

FBR re-audit powers approved

The committee approved a framework allowing the Federal Board of Revenue to conduct re-audits of business records in specified cases.

Under the proposal, a commissioner may order a re-audit where irregularities are suspected, subject to prior approval from the chief commissioner.

The registered taxpayer will be given an opportunity to present their position before a final order is issued.

The committee also approved provisions allowing the revaluation of inventory held by registered taxpayers.

A cost accountant will determine the revised value of stock, while inventory re-audits will be conducted by accountants selected from a panel approved by the FBR.

Commissioners will also be authorised to seek responses from taxpayers on specific matters during proceedings.

Penalties for digital non-compliance

The committee endorsed enforcement measures aimed at bringing businesses into the digital tax system.

Businesses that fail to integrate with the prescribed digital system within the stipulated period may face fines.

Repeated non-compliance could result in additional penalties and the sealing of business premises.

The committee also approved measures against fake and fictitious tax invoices.

A person issuing a fake invoice may face a penalty equal to the full value of the invoice, while the FBR may publish a list of entities involved in issuing such invoices.

Tax credits claimed through fictitious invoices would be cancelled.

The proposed framework also provides for a 20% penalty where discrepancies are identified between input and output tax, along with surcharges and further penalties for incorrect input tax claims.

Rules for seized goods

The committee approved amendments allowing seized goods to be disposed of through electronic auctions.

It also recommended that vehicles used to transport seized goods should not be automatically confiscated.

The committee completed its review of proposed amendments to the Sales Tax Act and Federal Excise Act during its second consecutive sitting on the Finance Bill.