Islamabad: The Senate Standing Committee on Finance and Revenue, chaired by Senator Saleem Mandviwalla, convened today to deliberate on the Tax Laws (Amendment) Bill, 2024. The meeting focused on key amendments aimed at improving tax compliance and addressing loopholes within the tax system.
The Chairman Federal Board of Revenue (FBR), Rashid Langerial , elaborated on Sub-Section (4) of Section 8B, which allows the use of a data-driven automated risk management system to regulate input tax claims.
He emphasized the FBR’s willingness to forego certain input tax claims, citing increased fraud as a major concern.
He noted that while registered entities are traceable, unregistered entities create a significant loophole in the system. The Chairman suggested that the matter be thoroughly reviewed by the FBR for further action.
On economic restrictions for certain individuals, the Chairman FBR informed that restrictions have been imposed on purchase of immovable property, and motor vehicle registrations. While Senator Anusha Rahman Khan proposed expanding these restrictions to include sale and purchase of gold.
The Committee also discussed the exchange of financial information by banks, with a focus on establishing transaction thresholds based on individuals’ declared income and turnover. The Chairman FBR proposed developing an algorithm in collaboration with banks to monitor transactions, with thresholds tied to individuals’ CNICs. The Minister for Finance and Revenue noted that while banks already have systems in place, integrating additional data could improve the identification of suspicious transactions.
Furthermore, the Committee discussed the appointment of auditors under Section 222 of the Income Tax Ordinance, 2001, either through contractual hiring or third-party engagement, to ensure proper implementation of tax provisions. Additionally, the need for greater transparency in the disclosure of information by public servants was highlighted.
A major topic of discussion was the issue of counterfeit cigarettes and beverages. The Chairman FBR explained that many cigarettes are not being stamped due to their exclusion from the sales tax regime, making them susceptible to counterfeiting. He clarified that legally produced cigarettes are stamped to differentiate compliant products from non-compliant ones. He further emphasized that removing cigarettes from the sales tax regime would categorize them as counterfeit.
The Chairman also expressed concerns about the track-and-trace system used to monitor product compliance, noting that the system’s integrity had been compromised, rendering it ineffective. The Committee concluded the meeting by proposing several recommendations on the bill and decided that these issues will be deliberated in upcoming meetings for through examination.
The meeting was attended by Senators Anusha Rahman Ahmad Khan, Shahzaib Durrani, Syed Shibli Faraz, and Mohsin Aziz, alongside the Minister for Finance and Revenue, the Minister of State for Finance and Revenue, The Chairman FBR, , and senior officials from relevant departments.