Federal Budget termed detrimental to industry
Lakhani also expressed disappointment over the State Bank of Pakistan's decision to maintain the policy rate at a high 11%, calling it overly cautious and a negative move that is inappropriate given the declining inflation and weakening industrial competitiveness.
He termed the Federal Budget 2025-26 as detrimental to the industry. He criticized the government for granting Federal Board of Revenue (FBR) officers the powers equivalent to a Station House Officer (SHO), essentially allowing them unchecked authority. Additionally, he said the imposition of an 18% tax on the IT sector is an ill-advised decision.
Lakhani pointed out that the federal budget contains numerous anomalies that the Ministry of Finance must rectify. He urged the government to withdraw harsh and anti-business tax measures before the Finance Bill is passed in Parliament. He warned that granting such strict powers to the FBR in the name of increasing tax collection will make it extremely difficult to achieve the set tax targets.
He also criticized the government for not reducing the interest rate, which he believes should have been brought down to 7%, especially when inflation has declined. He stated that decisions are not being made based on ground realities.
Lakhani also highlighted the absence of a policy for alternative energy sources. Instead, the government imposed an 18% sales tax on solar panels, which will increase their prices.
Furthermore, he opposed the imposition of taxes on e-commerce transactions, noting that unemployed youth were earning through e-commerce, and the government should either provide jobs or not take away their means of livelihood.
He did, however, support the move to bring non-filers into the tax net and stated that the imposition of a 10% sales tax in FATA and PATA is a positive step that will benefit the government and curb smuggling.
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
2 days ago
- Business Recorder
Finance Act restricts IRO's presence to business premises only
LAHORE: The Finance Act has restricted the presence of Inland Revenue Officer (IRO) to business premises only. Previously, the Bill had proposed that the Officer can be placed at the premises of the person. Tax experts have pointed out that a similar provision (Section 40B) is present in the Sales Tax Act 1990. However, it is restricted to registered persons and monitoring of taxable goods under the STA. This amendment in the ITO has given broad powers to the board or chief commissioner to post any officer or other official on the premises of any person to monitor production, supply of goods (even those goods that are exempt from sales tax by operation of primary legislation (Section 13) or delegated legislation (SRO, Notification etc). Further, they added, a similar provision (Section 54(1)) is present in the Sindh Sales Tax on Services Act (SSTSA) 2011, which allows the SRB Board to post an officer of the SRB to the premises of a registered person(s) or class of such persons to monitor the provision of services by such registered person(s). Compared to the SSTSA, the newly introduced Section 175A is broader in that it applies to any person(s). Now the officer posted shall also be at liberty to monitor production of all goods and services being provided even if they are not registered under the STA or SSTSA. This means that the FBR will now be empowered with more information than before in conducting sales tax audits. According to the taxonomists, the powers are against the foundational self assessment scheme of the ITO and will be prone to litigation on the plea of discrimination. They said it seemed that this amendment might have been introduced in light of the ad-interim orders issued by the courts of law, in various cases, including the case of Jadeed Feeds Industries v/s Federation of Pakistan and Others, wherein the FBR has been barred to post officers to premises where the taxpayer does not produce taxable supplies, so that the power to post officers to premises even where no taxable supplies are being produced, can be exercised under the ITO as opposed to the STA. Copyright Business Recorder, 2025
Business Recorder
2 days ago
- Business Recorder
FPCCI seeks withdrawal of Rs77/lit PL on FO
ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged Prime Minister Shehbaz Sharif to immediately withdraw the Petroleum Levy (PL) of Rs 77 per litre imposed on Furnace Oil (FO), effective July 1, 2025. The industry body warned that the decision could trigger mass industrial closures, layoffs, and a serious blow to exports. In a formal letter to the Prime Minister, FPCCI highlighted the severe consequences of the newly introduced Petroleum Levy, along with an additional Carbon Levy (CL) of Rs 2.5 per litre under the Finance Bill 2025-26. While acknowledging the government's broader fiscal and sustainability goals, FPCCI stated that the policy 'does not reflect economic ground realities' and poses a direct threat to the survival of Pakistan's industrial and export sectors. PL imposition on furnace oil: OICCI urges authorities to engage with key stakeholders According to FPCCI, the new levy has pushed the price of Furnace Oil beyond Rs 82,000 per metric ton—an over 80% increase. A mid-sized industrial unit consuming 20 metric tons of FO per day now faces an added cost burden of Rs 1.64 million per day or nearly Rs 50 million per month. 'For most industrial users, this is not a cost adjustment—it is a make-or-break moment,' FPCCI warned. Many industrial firms had switched to FO-based captive power generation after gas-based production became economically unviable due to the Grid Transition Levy (GTL), while grid connectivity remained limited, especially in older industrial zones and semi-urban clusters. 'Grid extensions and sanctioned load enhancements typically take 3 to 5 years. These industries cannot switch overnight. Without gas or grid access, furnace oil is their only operational lifeline,' the letter stated. Several major manufacturers and exporters had invested heavily in FO-based engines in recent years, based on policy stability. With FO now costing over Rs 185 per litre, captive generation costs have soared to Rs 48–52 per unit—well above grid rates. 'These firms cannot revert to gas or switch to the grid. Exports worth over $1.5 billion from these firms alone are now at direct risk, with cancelled orders, missed deadlines, and unviable pricing looming,' FPCCI warned. It noted that some companies have already begun shutdown procedures. The letter also stressed that Furnace Oil is an unavoidable by-product of crude refining. If it becomes un-sellable domestically or unprofitable to export, refiners are forced to reduce operations—affecting the supply of petrol, diesel, and jet fuel. 'This has already occurred several times in the past 18 months. Refiners have had to export FO at a loss just to keep plants running,' FPCCI noted, warning of a potential halt in domestic refining operations. FO-based thermal power plants, which are essential for emergency ramp-ups during peak demand and grid instability, will also be affected. With FO becoming unaffordable, power producers may stop stockpiling it—raising the risk of load-shedding and grid instability during summer. Thousands of oil tankers that rely on FO for transport face an existential crisis, with potential spillover into broader fuel logistics and employment sectors. Cement producers, who use FO for kiln operations or emergency power, could see energy costs rise by over Rs 300 million per year for a 2,000 MT/day kiln. Glass manufacturers that run high-temperature furnaces on FO would also be severely affected, as energy constitutes up to 30 percent of their total cost. 'Furnace stoppages destroy molten batches and damage equipment. Temporary shutdowns in this sector are economically ruinous,' FPCCI said, adding that thousands of skilled and semi-skilled workers could lose their jobs. After a comprehensive review by its Energy Advisory Committee, FPCCI concluded that the policy would not generate revenue, as the product it seeks to tax—Furnace Oil—would effectively vanish from the market due to its unviable economics. 'This is not a tax problem. It is an economic survival issue,' FPCCI emphasized. It proposed the following three corrective measures: (i) immediate withdrawal of the Rs 77/litre Petroleum Levy on Furnace Oil; (ii) uniform application of a nominal Carbon Levy of Rs 2.5/litre, aligned with rates on petrol and diesel; and (iii) a phased approach, gradually increasing the levy to Rs 5/litre only after viable alternatives (gas or grid) become available to industrial users. Copyright Business Recorder, 2025
Business Recorder
2 days ago
- Business Recorder
Overseas Pakistanis to be taxed as filers on property deals
ISLAMABAD: The Federal Board of Revenue (FBR) has clarified that the rate of advance income tax on purchase and sale of immovable properties by overseas Pakistanis would be 'filer rate' even if they are 'non-filer'. The FBR has issued frequently asked questions (FAQs) about the tax rates on buying and selling of immovable properties by overseas Pakistanis. According to the FBR, for overseas Pakistanis the rate of advance income tax on purchase and sale of immovable properties under sections 236C and 236K shall be 'filer rate' even if they are 'non-filer' subject to the following conditions:(I) They are holding POC or NICOP; (ii) They are non-resident in Pakistan meaning their stay in a financial year in Pakistan is less than 183 days. Investments in real estate: Overseas Pakistanis now eligible for exemption from higher tax rates The advance income tax under sections 236C and 236K at the time of transfer of immovable properties differ depending on the fair market value of the immovable properties, as well as the status of a person who has filed his income tax return and a person who filed late or did not file at all. The FBR explained that the overseas Pakistanis who are holding POC or NICOP can avail 'filer rate' under sections 236C and 236K by following procedure: The concerned Authority, Registrar or a housing Society who is responsible for registering, transferring or recording the immovable property shall click on the 'Overseas Pakistanis' link on FBR's web portal to create a PSID (payment slip identity). The system shall redirect the person to a form to declare his POC or NICOP No and the system will fetch automatically his details such as name and address; upload scanned copy of his POC or NICOP; and his status as 'resident' or 'non-resident' and can upload documents in support thereof. The system shall digitally make the PSID available in the IRIS digital inbox of the concerned Commissioner for approval. The Commissioner shall verify the documents attached, approve after verification and inform the person who created PSID by email and SMS. The system shall allow the person to make payment of advance income tax at 'filer rate' despite being a 'non-filer,' the FBR added. Copyright Business Recorder, 2025
