Senate panel opposes FBR arrest powers under CrPC

ISLAMABAD: Senate Standing Committee on Finance Saturday strongly opposed the Federal Board of Revenue’s (FBR) proposed powers to arrest Chief Executive Officers (CEOs), Chief Financial Officers (CFOs), and Board of Directors on tax fraud, as FBR is now exercising powers of Code of Criminal Procedure (CrPC).

In a continuation of its examination of the Finance Bill 2025–26, the Senate Standing Committee on Finance met under the chairmanship of Senator Saleem Mandviwalla. The meeting, held at the Parliament House, saw critical deliberations unfolding around tax justice, policing of the Federal Board of Revenue (FBR),

Chairman Senator Saleem Mandviwalla warned that Mandviwalla warned that there’s a grave risk of misuse. Even a minor FBR officer sending a notice could create chaos, he said.

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However, Chairman FBR, Rashid Mahmood Langrial, strongly defended the proposed changes in the Finance Bill (2025-26) and stated that there was no country in the world where tax officers were not allowed to make arrests for tax fraud. He said that even India and Bangladesh have granted the powers of arrest. He said that the top 5 percent of rich households evaded Rs 1.6 trillion taxes. “There is the tax gap of Rs 1.6 trillion due to low payment of taxes by top 1-5 percent taxpayers of Pakistan.”

He argued that the workforce stood at 67 million, and the top 1 percent of households evaded Rs 1.233 trillion. The top 5 percent evaded Rs 1.611 trillion. The remaining 95 percent of the total workforce evaded just Rs 0.14 trillion.

Chairman FBR said that the tall wall of protectionism through tariffs resulted in efficiencies in the domestic market. He asked the committee members to abolish import tariffs to make the economy to become competitive.

The Senate panel on Saturday continued deliberations to finalise recommendations for Finance Bill 2025-26. It recommended removing 18 percent GST on the import of solar panels, and increasing minimum wages from Rs 37,000 to Rs 40,000.

Chairman FBR delivered a candid briefing, painting a picture of Pakistan’s wealth and tax disparity. He said ninety-five percent of Pakistan’s population cannot pay taxes. Only five percent control the wealth. He said that the average annual income of the top 1% households is Rs 10 million. The focus must shift from expanding the tax net to taxing the rich effectively, Langrial emphasised.

Other alarming figures shared to the panel include 6 million registered tax filers, 132 million people under 18 or senior citizens outside the labour force. Socially indicating that despite the intense heat, 95% of Pakistanis don’t own air conditioners, the FBR Chairman pointed out.

During the clause by clause examination of the proposed amendments in Customs Acts, 1969 was incorporating digital cargo tracking system (CTS) to monitor the movement of imported exported transshipment and transit cargo. The Cargo Tracking System will identify the movement of non-duty paid or smuggled cargo through the use of technology while facilitating legitimate goods.

In another amendment on duties it was amendment that no duties and taxes demanded where the value of imported goods through post or courier is less than Rs.5,000. It is proposed that de-minimize limit for courier parcels may be revised/ reduced from Rs 15,000 to Rs 500 to restrict misuse of the facility of de minimize for individual/ personal use parcels.

Senator Shibli Faraz echoed concerns about law and order, remarking that the country is being turned into a police state. Even taxpayers will flee.

Senator Farooq H Naek underscored the impact of business because of the anti-money laundering notices, stating AML notices aren’t trivial. They can cripple a businessman’s ability to import or export.

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Similarly, Sindh Chamber of Agriculture proposed amendments to reduce the custom duty on imported tractors from 15% to 5% and also for re-conditional tractors. The Senate Standing Committee will reconvene on Sunday, June 15 to deliberate on Customs Tariffs and Income Tax Ordinance 2001.

Copyright Business Recorder, 2025