ISLAMABAD: The National Assembly`s Standing Committee on Finance and Revenue has approved an increase in the minimum threshold for daily cash withdrawals, raising it from Rs50,000 to Rs75,000 while rejected a separate proposal to impose an additional 2 per cent sales tax on online purchases, signalling resistance to new digital levies amid growing e-commerce activity.

Chaired by MNA Naveed Qamar, the committee also gave its nod to increasing the withholding tax rate on cash withdrawals from 0.6pc to 0.8pc. However, the committee struck down a parallel proposal to raise the tax from 15pc to 20pc on loan profits earned by banks.

Among other decisions, the committee endorsed the government`s proposal to increase the tax on services provided by digital platforms such as Google and YouTube from 10pc to 15pc. A separate proposal to levy a 4pc tax on rental income from commercial properties, however, was deferred for further deliberation.

The committee also turned down a contentious proposal that would have mandated all sales of Rs200,000 to be conducted through banking channels ameasure critics argued could burden small traders. Meanwhile, it approved an amendment excluding rental income from being adjusted against business losses.

The committee also registered strong opposition to the phased withdrawal of tax exemptions for the former Federally and Provincially Administered Tribal Areas (Fata and Pata).Terming the move an `economic assassination` of small-scale enterprises in the region, Mr Naveed urged the Federal Board of Revenue (FBR) to revisit the decision. He emphasised the need to safeguard livelihoods and stimulate economic recovery in historically underserved areas, directing the FBR to explore avenues for continued fiscal relief tailored to local realities.

A significant time of the committee`s proceedings was consumed by debate over conflicting tax rates proposed for low-income salaried individuals. While Finance Minister Muhammad Aurangzeb, in his budget speech, announced a 2.5pc tax rate for annual incomes ranging from Rs600,001 to Rs1.2 million, the Finance Bill 2025 instead reflected a lowered rate of 1pc.

FBR Chairman Rashid Mahmood Langrial told the parliamentary committee that the federal cabinet has reversed the proposed tax relief for low-income salaried individuals.

The newly appointed minister of state for finance, Bilal Azhar Kayani, defended the government`s decision, offering justification for the withdrawal of relief to lower-income salaried individuals. Citing revised estimates, he noted that public sector salaries were raised by 10pc a significant upward revision from the earlier projection of 6pc.

However, the members observed that the salary bump would benefit only government employees, while the upward tax adjustment would disproportionately impact private sector earners who remain outside the scope ofthe payincrease.

Mr Qamar voiced con-cern over the cabinet`s handling of the tax rate increase, questioning the rationale behind approving a higher tax burden on low-income salaried individuals.

FBR transformation plan Mr Langrial briefed the committee on the FBR transformation plan, whose implementation will start from December.

Some members of the parliamentary committee expressed reservations about the effectiveness of the Faceless Assessment System operational in Karachi, flagging mounting complaints over excessive charges, prolonged processing delays and resultant demurrages.

Lawmakers also raised concerns over the misapplication of the Digital Production Tracking and Digital Invoicing System.

They pointed out persistent errors by the tracking mechanism in differentiating between old, used and scrap materials an issue they claimed was leading to unwarranted compliance penalties.

In response, the FBR noted ongoing instances where usable goods wereallegedly being falsely declared as scrap, suggesting intentional misreporting by some stakeholders.

The FBR chairman informed the parliamentary committee that tax evasion in Pakistan`s cigarette and tobacco sector has reached an alarming Rs295 billion annually.

He said the FBR plans to introduce stricter enforcement mechanisms to curb widespread noncompliance in the industry.

Mr Langrial also highlighted concerns within the cotton and textile sector, noting that sales tax declarations remain significantly underreported.

He also listed several other sectors for low tax payments. He said that there is a tax gap of Rs7.1 trillion in the current fiscal year.

He said that smuggling through the Chagai border in Balochistan remains a major concern, contributing to an estimated Rs500bn in annual revenue losses. He noted tighter enforcement across other border regions and announced plans to introduce a cargo tracking system in the next fiscal year.To bolster monitoring, digital screening technology will be installed at 22 key Indus River bridges, enabling remote vehicle checks from up to 20 kilometres away. Mr Langrial assured that the system will not hinder legitimate business activity.

Senate committee on finance Meanwhile, in a separate session of the Senate Standing Committee on Finance, Finance Minister Aurangzeb briefed members on the economic outlook, budget measures and ongoing global challenges.

He confirmed that the World Bank had approved financing for the Reko Dig project, with the International Finance Corporation (IFC) contributing $700 million.

During the meeting, Senators Ahmed and Abdul Qadir from Balochistan raised the issue of water scarcity in the province. Senator Ahmed urged the committee that the issue of clean drinking water was even more important than health and education problems.

He demanded the committee complete Kachhi Canal Project inBalochistan, which had been launched 25 years ago.

Mr Aurangzeb told the committee that the budget measures were fully endorsed by the IMF under tax enforcement commitments. He dismissed concerns over hurdles in opening letters of credit, calling such claims `misinformation`.

On privatisation, he acknowledged missed targets but confirmed that Pakistan International Airlines has re-entered the privatisation process.

Addressing agricultural taxation, he emphasised a shift in narrative from claims that it could not be imposed to assertions that it it cannot be collected.

`We will collect it just give us the chance, he said, adding that provinces will begin agricultural income tax collection from July 1, 2025.

Senators also proposed increasing the retirement age ofbureaucratstoease pension pressures.

In response, Mr Aurangzeb noted that his previous institution had set retirement at 65, and the government would seriously evaluate the idea post-budget.