Lawmakers question effectiveness of proposed tax relief for salaried individuals and seek fiscal impact assessments
ISLAMABAD: The National Assembly Standing Committee on Finance and Revenue has sought detailed explanations from the government regarding the proposed salary tax slabs and other relief measures contained in the Finance Bill 2026, expressing concerns over their fiscal impact and effectiveness in providing meaningful relief to taxpayers.
During a meeting held at Parliament House, committee members directed the Ministry of Finance and the Federal Board of Revenue to submit comprehensive revenue estimates, fiscal impact assessments and implementation plans before further consideration of the proposed tax measures.
Committee Chairman Syed Naveed Qamar questioned whether the potential revenue losses arising from the proposed concessions had been fully quantified and asked the government to explain how it intended to offset any resulting fiscal shortfall.
Lawmakers seek clarity on relief for salaried class
Members focused considerable attention on relief measures for salaried individuals amid continuing inflationary pressures and rising living costs.
Lawmakers sought clarification on whether the revised tax slabs would provide meaningful relief to middle-income earners, while also examining the broader impact of the government’s taxation strategy on household finances.
The committee discussed various tax incentives included in the budget and raised questions regarding their effectiveness in stimulating investment, promoting exports and ensuring long-term economic sustainability.
Concerns over faceless audit system
While appreciating efforts to modernise Pakistan’s tax administration, committee members voiced concerns about the proposed faceless audit and artificial intelligence-based assessment framework.
Members highlighted the need for adequate safeguards relating to taxpayer rights, transparency, due process and data privacy before the new system is implemented.
The government has proposed establishing a National Faceless Audit Wing and National Assessment Wing as part of wider tax administration reforms aimed at reducing human intervention and improving efficiency.
Chairman Naveed Qamar emphasised that tax relief measures should remain equitable, economically justified and aligned with broader efforts to expand the tax base and improve compliance.
Government outlines budget relief package
Officials informed the committee that the federal budget package includes 11 relief measures, 10 rationalisation measures and five administrative reforms designed to promote economic growth, encourage investment and strengthen revenue collection.
Among the key relief measures highlighted during the briefing were:
• Reduction of exporters’ minimum tax from 2 per cent to 1.25 per cent.
• Continuation of the Final Tax Regime for IT exporters.
• Revised salary tax slabs and abolition of surcharge for salaried taxpayers.
• Lower withholding taxes on property transactions.
• Rationalisation of Federal Excise Duty on international air travel.
• Reduced super tax rates for selected corporate taxpayers.
The committee was also informed that the government plans to abolish taxes on contraceptives and selected women-related products, withdraw Capital Value Tax on foreign assets, grant sales tax exemptions to the shipping industry and provide incentives for the modernisation of brownfield refineries.
According to officials, these measures are intended to stimulate economic activity, support exports and reduce the tax burden on key sectors.
Administrative reforms under review
The committee also reviewed several administrative reforms proposed under the Finance Bill 2026.
These include greater use of third-party data, algorithm-based dispute resolution, digital invoicing systems and the establishment of a Central Data Hub supported by artificial intelligence for risk assessment and compliance monitoring.
Officials argued that the reforms would strengthen documentation of the economy and improve tax administration efficiency.
Further scrutiny expected
The committee is expected to continue its examination of the Finance Bill 2026 in upcoming meetings before final budgetary measures are approved by Parliament.
Lawmakers indicated that detailed fiscal assessments and implementation plans would be necessary to determine whether the proposed salary tax relief and broader tax reforms can achieve their intended objectives without adversely affecting government revenues.
The meeting was attended by several members of the National Assembly, including Hina Rabbani Khar, Nafisa Shah, Sharmila Faruqui and Mirza Ikhtiar Baig, along with senior officials from the Ministry of Finance and the FBR.
