Senate panel opposes Rs2.5 per litre carbon levy on fuel

ISLAMABAD: The FBR on Thursday informed the Senate Standing Committee on Finance and Revenue that the Digital Presence Proceeds Tax on International Platforms was proposed in the Finance Bill 2025-26, following the pattern of India, as New Delhi imposes digital tax on goods and services supplied digitally as an Equalization Levy.

Foreign vendors providing e-commerce goods or services will be taxed at a rate of 5 percent for income tax under the proposed Finance Bill. Chairman FBR stated that the tax has been imposed on digital platforms providing services without retaining physical footprint. The committee granted its clearance for the proposed tax. However, the Senate panel opposed the imposition of Rs2.5 per litre carbon Levy on petrol, diesel, and furnace oil in the budget. The meeting of the Senate Standing Committee on Finance and Revenue was presided over by Senator Saleem Mandviwalla. The Senate panel finalized its recommendations and now an internal meeting of the panel is scheduled to be held on Friday (today) to finalize its report for tabling before the Upper House of parliament for seeking approval and forwarding to the National Assembly next week. Chairman FBR Rashid Mahmood Langrial opposed the special treatment for the banking sector under the Seventh Schedule of the Income Tax Ordinance and recommended that it should be abolished in totality. Why special treatment for the banking sector, he questioned, and added that these banks should be treated like other companies. This triggered a heated debate during the Senate Standing Committee on Finance meeting. The FBR has proposed in the Finance Bill 2025-26 that banks can only claim provisions for non-performing loans as expenses if they are classified as “loss” under the State Bank’s Prudential Regulations. “Why the banks be given totally different tax treatment as compared to other registered companies,” the FBR chairman questioned. Tax laws cannot be dictated to the government by any particular sector, he added. The panel chairman recommended deletion of Special Economic Zone (SEZ) Act keeping in view government policy for not granting or extending tax exemptions. The committee was also briefed on the exemptions provided to businesses located in Khyber Pakhtunkhwa and the newly merged districts. It was informed that the exemptions for cinema operators have been limited till 2030. However, the FBR has extended the facility till 2026. Discussing the power sector’s initiative for payment of circular debt through refinancing, NEPRA officials stated that, as of now, Rs3.23 per unit is being charged to consumers. However, NEPRA proposed removal of 10pc cap limit, as it would help in obtaining necessary refinancing needed for the payment of circular debt.