Senate panel seeks 500% cap on key transactions for filers based on declared value

ISLAMABAD, JUN 19 (DNA): The Senate Standing Committee on Finance has recommended raising the threshold for imposing a ban on economic transactions, including purchasing property, acquiring new vehicles, freezing bank accounts, and investing in securities, to 500%.

In the Finance Bill for 2025-26, presented to Parliament, the Federal Board of Revenue (FBR) proposed a threshold limit of 130% for these types of economic transactions. However, senators from various political parties have urged the FBR to increase the threshold to 500% based on the declared values in filed income tax returns for buying plots, new cars, operating bank accounts, and investing in securities.

The Senate panel also recommended a one per cent tax on cash withdrawals from banks, bringing recreational clubs into the tax net, and bringing online tuition/coaching. For salary slabs, the FBR proposed bringing down the tax rate for Rs0.6 million to Rs1.2 million from 5% to 2.5% in the Finance Bill.

Earlier, the proposed Finance Bill had brought it down from 5% to 1%, but the federal cabinet jacked it up to 2.5% for increasing salaries of public sector employees by 10%.

The Senate panel held its meeting under the Chairmanship of Senator Saleem Mandviwalla here at the Parliament House on Wednesday. Under 114C, the FBR proposed banning economic transactions for an ineligible person, and Chairman FBR Rashid Mehmood Langrial and FBR’s Member Tax Policy Inland Revenue Dr Najeeb Ahmed argued that the FBR proposed Section 114C for slapping a ban on economic transactions for ineligible persons.

Citing an example, the FBR high-ups say that if a person shows assets of Rs10 billion, he or she will be eligible to buy a plot of Rs13 million. The FBR has also developed an App and gave a demo to select members of the National Assembly that would allow filers to amend the filed returns to become eligible by declaring increased worth.

Senator Faisal Vawda stated that there was an impression that the buyer would have to seek NOC from the commissioner before making a transaction. He said that if this section was not relaxed, then the business of property would die down. He proposed that both the tax rate for sellers and the purchase of property be reduced.

Senator Mohsin Aziz from PTI asked the FBR to increase the threshold from 130% to 500% for an eligible person.

Minister for Finance Muhammad Aurangzeb stated that the government would come up with an increased threshold for slapping a ban on economic transactions.

In the Finance Bill 2025-26, income tax has been introduced on recreational clubs, which were previously exempted from tax. State Minister for Finance and Revenue Bilal Azhar Kayani stated that the recreational clubs are liable to pay tax where their income exceeds the expenditure, and such steps have been taken to broaden the tax net of the country.

Federal Minister for Finance and Revenue also highlighted the newly introduced mortgage facility. He stated that mortgages will be available for houses up to 2,000 sq feet, and the individuals will also be eligible for tax credit not exceeding 30% of total income.

Commenting on the FBR’s new move of disallowing 10% in case of purchases from non-registered suppliers, the committee opined that such a move will discourage competitive markets, as the number of registered suppliers is nominal across the country.

The committee also expressed concerns over the newly inserted clause, which restricts the “Eligible Person” from making any purchase exceeding 130% of the wealth reflected in his/her last year’s statement. The committee recommended that such threshold should be exceeded to 400% of the previous year’s statement.