FPCCI urges govt to defer tax fraud arrest powers, Rs200,000 banking transaction rule

ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industries (FPCCI) on Friday urged the government to defer the implementation of arrest powers for tax fraud and the mandatory use of banking channels for transactions exceeding Rs200,000.

They extended the warning to take “extreme steps” if the government did not fulfil their demands.

FBR’s Member Operation Inland Revenue Dr Hamid Ateeq Sarwar assured the business community that the arrest powers under the Sales Tax Act 37A would only be used against those involved in fake/flying invoices and causing multibillion-rupee losses to the national exchequer.

“There are 60,000 sales tax filers out of a total of 200,000 registered entities. There is no intention to arrest manufacturers or traders through this law of the land,” Dr Hamid Ateeq Sarwar assured the FPCCI forum here in the federal capital on Friday.

The representatives of the FPCCI across the country were present on the occasion including Ghee/Cooking oil, Flour Mills Association, President Islamabad Chamber, Rawalpindi, online participants from Karachi Chamber, Lahore Chamber, small traders representative Ajmal Baloch, Real Estate Agents and many others.

At one stage, the FPCCI leadership warned that a strike would be observed on July 19 all over the country but after getting an assurance from the tax machinery that the powers of FBR would not be abused, they announced that the FPCCI would not go for any strike on July 19.

On the real estate taxes, President of Real Estate Federation Pakistan, Sardar Tahir, stated that the stamp duty was increased in Islamabad from 1 to 3 percent by the chairman CDA unilaterally so the benefits of reduction in tax rate for buyers of property by 1.5 percent had evaporated in the air with just one step. The Minister of State for Finance, Bilal Azhar Kayani, stated that this issue would be conveyed to the Minister for Finance and would also be taken up with the Minister for Interior for its resolution.

Atif Ikram Sheikh, President FPCCI, in his address asked the government to defer 37A under which the FBR possessed powers of arrest on tax frauds, otherwise they would go for extreme steps. However, the minister of state argued that the Finance Act 2025 was approved by parliament and offered the businessmen that he would be ready to hold a meeting with them every month to avoid misuse of power.

This act of the parliament cannot be done away with, however, abuse of power will not be allowed, he added. He said that the power to arrest would be used against those who plunged into Rs100 billion fraud through fake and flying invoices in case of Sales Tax. Hamid Ateeq Sarwar in his address stated that the powers to arrest would not be used against manufacturers or traders but it would be used against fake/flying invoices. He said that there was no need for apprehension in the ongoing fiscal year for payment of Rs200,000 through banking channel under 21-S of the Income Tax because the return filers would have to show in their returns in the next fiscal year 2026-27 and would have to give response if selected in audit case.

Speaking at the meeting organised by the FPCCI, Minister of State Bilal Azhar Kayani said the government has achieved economic stability. Inflation has decreased from 38 per cent to single digits, with the inflation rate for the last fiscal year recorded at 4.5 per cent, providing significant relief to the public.

He highlighted that the policy rate has been reduced from 22 per cent to 11 per cent, offering relief to the business community. These economic achievements, he noted, seemed impossible when Prime Minister Shehbaz Sharif took office amidst default-like conditions.

Minister Kayani stated that the federal budget, while adhering to the IMF programme, has provided relief to the people. Prime Minister Shehbaz Sharif is focused on fixing the country’s economic fundamentals through privatisation, right-sizing, economic reforms, and controlling deficits. Simultaneously, the prime minister is engaging in continuous consultations with industrialists, economists, and stakeholders to transform economic stability into sustainable economic growth.

He acknowledged that the IMF programme has helped restore economic stability. Despite India’s attempts to undermine Pakistan’s economic interests during challenging times, the government successfully secured approval for the second tranche from the IMF Board based on its economic performance.