Senate Warns FBR to Stop Entering Provincial Tax Domain or Face Consequences

The Senate Standing Committee on Finance and Revenue has issued a stern warning to the Federal Board of Revenue (FBR) to avoid entering the domain of provinces during the finalization of the Finance Bill (2025-26). The meeting was chaired by Senator Saleem Mandviwalla, held its fourth consecutive session in the Parliament House, to review the Finance Bill, 2025, which includes the Annual Budget Statement presented to the Upper House on June 10 under Article 73 of the Constitution. Mandviwalla warned that the FBR should not enter into the domain of provinces by including services in different provisions of the Finance Bill (2025-26). Sindh Revenue Board (SRB) is submitted different observations on the Finance Bill (2025-26) where the FBR has illegally entered into the domain of services, he added. During the review of the Finance Bill (2025-26) at the Senate Standing Committee on Finance, Chairman of the committee Senator Saleem Mandviwalla stated that the SRB has raised objections on certain proposed amendments in the Sales Tax Act 1990. “Any other province has not submitted its comments on the SRB”, he added. Saleem Mandviwalla pointed out that the SRB has objected to an amendment in section 8b of the Sales Tax Act 1990. This definition is combining both goods and services. According to the definition of “courier” under the Sales Tax Act, it means any entity engaged in the delivery of goods and collection of cash on behalf of a seller, including logistic services, ride-hailing services, food delivery platforms, and e-commerce delivery services. It is objected that the “Courier” is a service and, therefore, not “goods” and also outside the purview of federal sales tax. It is a provincial tax and cannot be defined under FBR Chairman said that the couriers would operate only as a withholding agent, and FBR has not included services in the new law. “(5AC) “courier” means any entity engaged in the delivery of goods and collection of cash on behalf of a seller, including logistic services, ride-hailing services, food delivery platforms, and e-commerce delivery services.” FBR Chairman said that we are ready to exclude ride-hailing services, food delivery platforms, and e-commerce delivery services from the definition of “courier”. SRB has also raised objections to the proposed amendments in section 8B of the Sales Tax Act on the limit of input tax allowance using the database automated exchange system. Opening the session, Chairman Mandviwalla lauded the “diligence and active presence” of the Federal Minister for Finance, stating, “The Minister’s consistent participation and valuable input during these sessions reflect the government’s commitment to transparent fiscal reforms. Senator Anusha Rehman raised critical points about the regulation of e-commerce platforms, emphasizing not to not burden unemployed individuals, specifically Youth & Women, making ends meet from home. Only register platforms doing business above Rs. 2 crore.” On the proposed e-billing system, Senator Mohsin Aziz noted, “Malaysia began phased implementation three years ago. We must assess our readiness.” The committee also discussed the “ Islamabad Capital Territory ( Tax on Service ) 2001, Provisions of the Finance Bill, 2005. It was discussed that, as per the IMF benchmark “negative list of services” should also be developed. While discussing the Public Finance Management Act, 2019, a major disclosure rocked the session, revealing Rs 43 billion held in NADRA accounts, under the surplus profit of entities, with other government institutions also profiting from public service fees and property sales, without transferring the revenue to the central treasury. Senator Anusha Rehman condemned this, stating The government is borrowing its own money from banks and paying interest, while institutions profit off public funds.” The Committee directed the Establishment Division and the Ministry of Finance to submit complete account details of all such institutions, lists of investments and profits earned, legal basis for withholding funds from the national treasury. The committee, while discussing the Federal Excise Provisions of Finance Bill 2025, Approved Abolishing the Federal Excise Duty (FED) on the first purchase of immovable property. The Senate Committee will reconvene on Tuesday, with the Finance Minister scheduled to address tax exemption policies and provide further clarity on institutional financial practices. The meeting was attended by Finance Minister Muhammad Aurangzeb, Senators Farooq Hamid Naek, Syed Shibli Faraz, Anusha Rehman Ahmad Khan, Mohsin Aziz, Ahmed Khan, Munzoor Ahmad, Mohammad Abdul Qadir, and senior officials from FBR and other key departments.