A Senate panel on Wednesday put its full weight behind a proposal to tax the profits of the country’s high-end private clubs, following some shocking revelations by the country’s tax chief.
“These clubs are mere hubs of luxury for a privileged few,” Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial said, briefing a meeting of the Senate Standing Committee on Finance, chaired by Senator Saleem Mandviwalla.
The FBR chief said that elite recreational centres like the Islamabad Club were catering to just a few thousand people while holding billions of rupees in their bank accounts.
“Some of them own land worth millions of dollars. It’s time they contribute back. Any club that makes a profit should be taxed,” Langrial said.
The committee agreed, approving the proposal to impose a tax on the profits of major private clubs across Pakistan.
Separately, Langrial outlined key income tax proposals for the upcoming fiscal year. He said there was a suggestion to offer an annual tax exemption on income up to Rs600,000.
For those earning between Rs600,000 and Rs1.2 million annually, a 2.5% income tax would apply.
“A person earning Rs100,000 a month paying Rs1,000 in tax is not an earth-shattering burden,” Langrial noted.
However, Langrial also met with opposition during the meeting, as some members were not satisfied with the income tax relief for the salaried class.
Senator Mohsin Aziz argued that the exemption limit should be raised to Rs1.2 million a year, while Senator Shibli Faraz pointed out that inflation had eroded purchasing power.
“What was worth Rs50,000 is now effectively worth Rs42,000,” Faraz said.
The committee also rejected a proposal to impose taxes on online commerce, citing the need to protect the emerging digital economy.
The FBR is anticipating an additional revenue of Rs65 billion in the upcoming fiscal year from its proposed two taxation measures targeting e-commerce and international platforms flooding their goods in Pakistan, The News reported on Wednesday.
Previously, the advance tax on offshore digital services was set at 10%, but it is now proposed to increase to 15%. This tax will apply to companies like Google and YouTube, to encourage them to establish offices in Pakistan.
Salaried workers in Pakistan are set to take home more pay under the new federal budget, as the government has proposed to slash income tax rates for middle- and high-income earners to ease their financial burden.
Finance Minister Muhammad Aurangzeb, while presenting the federal budget for 2025-26 on June 10, said the Prime Minister Shehbaz Sharif had made it a priority to support salaried individuals, who have long shouldered a disproportionate share of taxes.
In line with that, the government seeks across-the-board cuts in income tax rates for the salaried class.
The biggest relief targets taxpayers earning up to Rs2.2 million annually, with the minimum rate reduced from 15% to 11% – a 4% fall.
The finance minister said similar cuts are being proposed for higher income brackets as well.
For those earning between Rs2.2 million and Rs3.2 million, the tax rate is expected to ease from 25% to 23%.
Aurangzeb said the proposal was aimed at not only to provide relief but also to keep salaries in line with inflation, making the tax structure simpler and more balanced.