NA Panel Rejects Flat Property Tax Rate, Approves Tax Reforms Targeting Elite Clubs, E-Commerce, and Fraud Prevention

ISLAMABAD: The National Assembly Standing Committee on Finance has rejected a proposal to impose a uniform 4% rental valuation rate on commercial properties, citing concerns over fairness and implementation in diverse regions. The committee, however, approved several other key tax reform measures, including expanding the tax net to elite clubs, addressing e-commerce taxation, and curbing arrest powers of tax officials in fraud cases.

The decisions were made during deliberations on the Finance Bill 2025, chaired by MNA Naveed Qamar, with FBR Chairman Rashid Mahmood Langrial leading the Federal Board of Revenue (FBR) team in responding to lawmakers’ questions.

Uniform Property Tax Proposal Withdrawn After Opposition

A major point of contention was the proposed 4% uniform rental valuation rate for commercial properties. MNA Mirza Ikhtiar Baig suggested reducing the rate, but the FBR chairman argued it was necessary to curb discretionary practices by tax officers.

However, MNA Usama Mela and others highlighted that such a rate may be viable in urban areas but would create hardships in rural regions. Facing resistance, the FBR officially withdrew the proposal, agreeing to revisit it in future budgets if needed.

Elite Clubs Now Under Tax Net

FBR also announced a significant step toward fiscal transparency by including elite clubs in the tax framework. Clubs charging Rs1 million or more for membership, such as Islamabad Club, will now be required to submit detailed income and expense reports and comply with income tax regulations.

“We are bringing these high-end facilities under the tax net to ensure equal treatment,” said FBR Chairman Rashid Mahmood Langrial.

Concerns Over E-Commerce Taxation Raised

MNA Muhammad Mobeen Arif raised concerns about low taxation on online businesses, pointing out the disparity between e-commerce and physical retailers. He noted that while online vendors pay just 1% tax, shopkeepers are taxed at 5%.

FBR assured the committee that a team is working to address the issue and close gaps in digital commerce taxation.

Stamp and Registration Act Amendments

The committee reviewed amendments to The Stamp Act 1899 and The Registration Act 1908. While it approved changes to the Stamp Act, the proposed amendments to the Registration Act were withdrawn by the ministry.

Tax Officials’ Arrest Powers Curbed in Fraud Cases

In a significant move to address business community concerns, State Minister for Finance Bilal Azhar Kayani confirmed that tax authorities can no longer arrest individuals during the inquiry stage of sales tax cases.

The revised law mandates:

• No arrests for sales tax fraud below Rs50 million
• Mandatory inquiry and approval by a three-member FBR committee
• Right to hearing for the accused
• Arrests only permitted after CIR approval based on credible evidence

This marks a shift from previous provisions where lower-level officers could make arrests, now ensuring transparency and accountability in tax enforcement.

“These reforms aim to protect honest taxpayers while ensuring strict action against fraudsters,” said the minister.