Parliamentary resistance to overreach by Pakistan’s Federal Board of Revenue (FBR) gained momentum on Monday as standing committees from both the Senate and the National Assembly decisively rejected proposals aimed at granting excessive surveillance powers to tax authorities. The controversial provision sought to authorize the deployment of FBR personnel to monitor industrial production directly at factory sites—a move that legislators across party lines labeled intrusive and counterproductive.
The Finance Bill 2025-26, which is undergoing clause-by-clause scrutiny, was debated in simultaneous sessions of the Senate and National Assembly Standing Committees on Finance and Revenue. These were chaired by Senator Saleem Mandviwalla and MNA Naveed Qamar, respectively, and attended by lawmakers at Parliament House.
In a firm stance against the proposal, the National Assembly’s committee turned down the idea of stationing FBR staff within factories. MNA Naveed Qamar highlighted the dangerous precedent such actions could set, warning that allowing FBR to utilize law enforcement or intelligence agencies would open the door to abuse. “This is just another way for FBR officers to extract personal gain,” he remarked.
Business figures echoed the concerns. MNA Mirza Ikhtiar Baig openly criticized the suggestion, calling it offensive to the business community. “If police officers show up at my factory tomorrow, I will lock it down,” he declared, reflecting broader industry apprehension over state intrusion.
MNA Sharmila Faruqi added that the proposal risked transforming FBR into a shadow version of the National Accountability Bureau (NAB), known for its aggressive tactics. While Finance Minister Muhammad Aurangzeb maintained that public confidence in FBR was being rebuilt, critics remained skeptical.
Opposition leader Omar Ayub Khan reinforced the rejection, stating that business operations would grind to a halt under such conditions. He cited rampant smuggling in the petroleum sector, estimated at Rs550 billion, as a more pressing concern being overlooked. The FBR Chairman responded that enhanced monitoring in the sugar sector alone had resulted in Rs39 billion in additional revenue collection, with a projected annual impact of Rs48 billion.
Despite the rejection of certain provisions, the committees approved several other significant measures. Tax exemptions for Special Economic Zones (SEZs) will now be phased out by 2035. Simultaneously, support was extended for non-profit organizations, although FBR vowed to scrutinize their operations to ensure alignment with charitable purposes.
The proposal to give FBR automatic access to banking data of high-risk individuals was deferred. However, officials stated that unusual discrepancies—such as a person earning Rs10 million monthly but transacting Rs100 million—would still trigger inquiries. A related clause was approved that allows property purchases up to Rs10 million without the need to declare the source of income.
Further, Minister of State Bilal Azhar Kayani detailed a cap whereby taxpayers seeking to buy property must declare income at least 130 percent of the property’s value. Declarations must also include online submissions regarding any borrowed or gifted funds involved in such transactions.
On the legislative side, the Senate committee continued to refine sales tax provisions. Senator Farooq H. Naek introduced proposals to moderate penalties for tax fraud, including halving both fines and prison sentences. His recommendations also included procedural safeguards such as requiring three notices before prosecution and setting a 60-day deadline for High Courts to decide tax appeals.
As the Finance Bill 2025-26 moves forward, the rejection of proposals that expand FBR’s physical presence in businesses sends a clear message: fiscal reform must not come at the expense of civil liberties or economic stability.