ISLAMABAD: A parliamentary committee on Thursday continued its deliberations on the Finance Bill 2026, examining proposals related to sales tax exemptions, import regulations, income tax amendments, digital tax administration, and sector-specific concessions.

A meeting of the National Assembly’s Standing Committee on Finance, chaired by Naveed Qamar, took up three key proposals for discussion, including the expansion of sales tax on retail prices, a 15-year tax exemption for Pakistan International Airlines (PIA), and the removal of taxes on stationery items.

The Federal Board of Revenue (FBR) informed the committee that the proposal seeks to include 21 additional categories covering hundreds of consumer products, including packaged food, beverages, cosmetics, insecticides, and household goods.

It was explained that for locally manufactured products, retail prices would be printed at the manufacturing stage. It was further pointed out that small manufacturers often charge full prices but do not pay the corresponding sales tax.

FBR proposes adding 21 new categories of retail-packaged products to ST regime

When Mr Qamar asked how imported shaving foams would be covered under the scheme, tax officials said importers are already required to declare retail prices and sales tax at the time of entry, which helps curb under-invoicing.

Director General Tax Policy Dr Najeeb Memon said the proposal applies only to goods in retail packaging and would relieve importers of the additional four per cent tax on sales to unregistered persons.

Mr Qamar cautioned that agricultural sprays should not be inadvertently included.

The tax officials told the committee that the tax would apply from the date of transfer of inherited property. An earlier proposal had suggested levying the tax from the day of a parent’s death, but the committee agreed that liability should begin only once the property is formally transferred.

Mr Qamar objected that FBR was seeking to tax property not yet registered, stressing that no levy should apply until inheritance is legally transferred.

The FBR officials clarified that family settlements would not attract the tax.

The committee also discussed tax on stationery items. Members emphasised that educational supplies, including pencils and geometry boxes, should remain exempt to avoid burdening families.

The tax officials said exercise books would remain exempt from sales tax, while other stationery items are proposed to be taxed at a concessional rate of 10pc.

MNA Mirza Ikhtiar Baig urged exemption for stationery, but the FBR officials said such items are taxed even in the UK. Mr Qamar questioned the likely revenue from the measure, while the officials said withdrawal of exemptions was linked to IMF conditions.

The committee directed the FBR to provide detailed revenue estimates and impact analysis before a final decision. MNA Javed Hanif said legislation should prioritise public benefit.

A discussion also took place on the proposed 15-year sales tax exemption for PIA under the privatisation agreement. Members raised concerns that granting a concession to one airline would create an uneven competitive environment.

The aviation secretary said the concession formed part of the share purchase agreement negotiated with investors.

Minister of State for Finance Bilal Azhar Kayani cautioned that withdrawing the exemption could affect privatisation, though he said the government could engage the IMF based on the committee’s recommendation.

Mr Qamar directed officials to consult the government and return with a response. He observed that tax policy should remain sector neutral and avoid market distortions or undue advantage to any single entity. The committee recommended reviewing the broader sectoral impact and considering similar concessions across the aviation sector.

The committee also considered provisions relating to digital integration, faceless assessment, algorithmic settlement, and the establishment of an Independent Case Scrutiny Committee.

The committee agreed to tax returns on life insurance policies surrendered within the first four years, saying it would discourage misuse while protecting long-term policyholders.

Published in Dawn, June 19th, 2026