The Senate Standing Committee on Finance has rejected the proposed sales tax on e-commerce transactions while approving a tax on profits earned by elite private clubs, including the Islamabad Club.
The committee, chaired by Senator Saleem Mandviwalla, convened in Islamabad on Wednesday to deliberate over tax measures proposed in the federal budget for 2025–26. Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial briefed the committee on key budgetary provisions, including changes to income tax slabs and new oversight mechanisms.
Langrial told the committee that exclusive institutions such as Islamabad Club serve just 3,000 individuals but hold billions of rupees in reserves. “We are proposing a tax on the profits of such clubs,” he said, justifying the levy as a measure to address income concentration and inequity.
The committee also discussed the new tax brackets for salaried individuals. According to the FBR chairman, annual income up to Rs600,000 will remain exempt, while income between Rs600,000 and Rs1.2 million will be taxed at a rate of 2.5%. “Paying Rs1,000 in monthly tax on a salary of Rs100,000 is not a back-breaking burden,” Langrial remarked.
Some senators disagreed. Senator Mohsin Aziz proposed raising the exemption threshold to Rs1.2 million per year, while Opposition Leader Senator Shibli Faraz argued that high inflation had significantly eroded the real value of income. “What was worth Rs50,000 is now effectively worth Rs42,000,” he said.
Meanwhile, the FBR’s newly introduced electronic cargo tracking system was also reviewed. As part of the budget reforms for FY26, the “E-Bilty” system has been formally incorporated into Pakistan’s Sales Tax law, aimed at improving real-time monitoring of goods in transit.
Though the Senate committee rejected the proposed 2% sales tax on e-commerce, the FBR had earlier notified that courier companies would be made responsible for collecting the tax at source. In addition, online platforms were required to deduct taxes on digital sales and submit monthly transaction data to the tax authority, a move intended to expand the digital tax base.
The committee’s rejection of the e-commerce tax comes amid broader concerns about the informal nature of digital transactions and the potential impact of taxation on small businesses operating online. The proposal’s fate will now depend on parliamentary negotiations during final budget approval.
