KARACHI: Business leaders have expressed relief over the government’s decision to reverse several controversial budgetary measures for FY26, following extensive consultations between trade bodies and tax authorities.
Speaking at a press conference at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) head office on Friday, FPCCI President Atif Ikram Sheikh said the powers granted to the Federal Board of Revenue (FBR) under Section 37A of the Sales Tax Act have been strictly limited.
These powers will now apply only in serious cases of sales tax fraud — such as fake or flying invoices — and any investigation must be approved by a committee comprising a tax commissioner and two nominees from recognised trade bodies.
He further announced the formation of a Grievances, Redress and Monitoring Committee, comprising representatives from FPCCI, local chambers, and FBR officials. The committee will review all arrests on a fortnightly basis to ensure that due process is followed and businesses are not harassed arbitrarily.
Addressing concerns about Section 21(s) of the Income Tax Ordinance — which disallowed 50pc of expense claims for transactions involving cash payments above Rs200,000 — Sheikh said the government has clarified that any cash received into sellers’ bank accounts against invoices will now be treated as a banking transaction, regardless of whether it is from an NTN holder or not. This change is expected to ease operational challenges faced by businesses.
Regarding Section 8B of the Sales Tax Act, Sheikh said FBR has pledged not to impose input tax restrictions or alter conditions without prior consultation with sector-specific trade representatives.
Goods confiscation
Separately, Karachi Chamber of Commerce and Industry (KCCI) President Muhammad Jawed Bilwani voiced strong support for government efforts to curb smuggling but cautioned against the wrongful confiscation of goods belonging to legitimate businesses.
In a statement, Bilwani said many legally imported, locally purchased, or auctioned goods are often seized during raids, causing irreparable financial damage and harming the reputation of genuine traders.
He urged enforcement agencies to focus their efforts at points of origin such as borders, ports, and airports, rather than disrupting commercial markets in Karachi.
Published in Dawn, August 9th, 2025
