Finance Bill 2026 issued by Parliament

A BILL to give effect to the financial proposals of the Federal Government for the year beginning on the first day of July, 2026, and to amend certain laws

WHEREAS, it is expedient to make provisions to give effect to the financial proposals of the Federal Government for the year beginning on the first day of July, 2026, and to amend certain laws for the purposes hereinafter appearing;

It is hereby enacted as follows:-

Short title and commencement. ─ (1) This Bill shall be called the Finance Bill, 2026.

It shall, unless otherwise provided, come into force on the first day of July, 2026.

Amendments of the West Pakistan Motor Vehicles Taxation Act, 1958 (WP Act XXXII of 1958).- In the West Pakistan Motor Vehicles Taxation Act, 1958 (WP Act XXXII of 1958) as in force in the Islamabad Capital Territory, in the Schedule, for the Tables 2, 3, 4 and 5, the following shall be substituted, namely:-

“SCHEDULE

[see section 3]

Table 2

Token Tax on Motor Vehicles

S.No	Category	Tax Rates for ICT
(1)	(2)	(3)
1	Engine capacity upto 1000 CC	20,000
2	Engine capacity from 1001 to 1300 cc	0.25 % of Invoice Value
3	Engine capacity from 1301 to 1500 cc	0.25 % of Invoice Value

4	Engine capacity from 1501 to 2000 cc	0.25 % of Invoice Value
5	Engine capacity from 2001 to 2500 cc	0.35 % of invoice Value
6	Engine capacity from 2501 and above	0.35 % of invoice Value

Table 3 – Motor Cabs

S.No	Category	Tax Rates for ICT
(1)	(2)	(3)
1	Engine capacity upto 1000 CC	600
2	Exceeding 1000cc but not more than 1300cc	1,000
3	Exceeding 1300cc but not more than 1500cc	1,700
4	Exceeding 1500cc but not more than 2000cc	2,500
5	Exceeding 2000cc but not more than 2500cc	3,400
6	Exceeding 2500cc	4,200

Table 4

Public Service Vehicle

S.No	Category	Tax Rates in ICT Per seat per annum
(1)	(2)	(3)
1	Vehicle (8 seater)	350
2	Vehicle (13 seater)	400

3	Vehicle (15 seater)	500
4	Vehicle (16 seater)	600
5	Vehicle (42 seater)	700
6	Vehicle (52 seater)	850

Table 5

Commercial Vehicle/Loading Vehicles

S.No	Category	Proposed Rates
(1)	(2)	(3)
1	Vehicles not exceeding 1250 KG in laden weight	500
2	Vehicles with maximum laden capacity exceeding 1250 KG but not exceeding 2030 KG	1,000
3	Vehicles with maximum laden capacity exceeding 2030 KG but not exceeding 4060 KG	1,000
4	Vehicles with maximum laden capacity exceeding 4060 KG but not exceeding 6090 KG	6,600
5	Vehicles with maximum laden capacity exceeding 6090 KG but not exceeding 8120 KG	6,600
6	Vehicles with maximum laden capacity exceeding 8120 KG	12,000
7	Vehicles with maximum laden capacity exceeding 8120 Kg, but not exceeding 12000 Kg	12,000
8	Vehicles with long trailers or other vehicles with maximum laden capacity exceeding 12000 Kg, but not exceeding 16000 Kg	18,000

Vehicles with long trailers or other vehicles with

maximum laden capacity exceeding 16000 Kg

24,000

Tractor (With trolley)

2,600

Tractor (Without trolley)

2,600.”.

Amendments of the Petroleum Products (Petroleum Levy and Climate

Support Levy) Ordinance, 1961 (XXV of 1961).- In the Petroleum Products (Petroleum Levy and Climate Support Levy) Ordinance, 1961 (XXV of 1961), the following further amendments shall be made, namely:—

in section 2,-

(a) for clause (1), the following shall be substituted, namely:-

“(1) “company” means an oil marketing company and includes a person engaged in the manufacturing, refining or reclaiming of lubricating oil from used lubricating oil under a license granted by OGRA;”;

(b) after the omitted clause (4D), the following new clauses shall be inserted, namely:

“(4E) “Oil Marketing Company” means a company, other than lubricant marketing company, engaged in purchasing or obtaining of petroleum products from refineries or blending plants or through sources abroad for selling, distributing or marketing, directly through his agents or dealers at his dispensing outlets or filling stations; and

(4F) “OGRA” means the Oil and Gas Regulatory Authority of Pakistan established under the under the Oil and Gas Regulatory Authority Ordinance, 2002 (Ordinance XVII of 2002);”;

“(7) “refinery” means a facility or industrial plant where crude oil is refined to produce petroleum products.”;

in section 3,-

(a) for sub-section (1), the following shall be substituted, namely:-

“(1) The payment of Petroleum Levy and Climate Support Levy shall deemed to be a license condition of every company, refinery or licensee from the date of issue of license by OGRA and such company, refinery or licensee shall pay to the Federal Government, Petroleum levy and Climate Support Levy on petroleum products at such rates as may respectively be notified by the Federal Government in the official Gazette, from time to time.”; and

(b) sub-section (3) shall be omitted;

after section 3A, the following new sections shall be added, namely:-

“3B. Late payment surcharge.— (1) Where any amount of the Petroleum Levy and Climate Support Levy are not paid within the prescribed due date i.e. the date of filing of Sales Tax or Federal Excise Returns in case of local production and date of payment of custom duty in case of imported products, the defaulting company, refinery or licensee shall, in addition to the amounts due, be liable to pay late payment surcharge calculated in the manner as specified in sub-section

(1) of section 40D of the Public Finance Management Act, 2019.

3C. Recovery of amounts due under this Ordinance.— (1) Notwithstanding anything contained in the Public Finance Management Act, 2019 and subject to sub-section (2) of this Act, if the Petroleum Levy and Climate Support Levy due or the late payment surcharge are not paid within ninety days, the relevant department responsible for collecting the Petroleum Levy and Climate Support Levy under sub- section (2) of section 3A of this Act, may request the Commissioner (Inland Revenue) to exercise powers of recovery in the same manner as income tax arrears under Part IV of Chapter X of the Income Tax Ordinance, 2001 (XLIX of 2001) or rules made thereunder in this behalf:

Provided that the Commissioner (Inland Revenue) shall have no authority to grant extension of time to the notice of recovery or allow payments of outstanding levies under this Ordinance including late payment surcharge in instalments of equal or varying amounts.

(2) The relevant department under sub-section (2) of section 3A of this Act, as it deems fit and proper, may either, separately or simultaneously, initiate recovery of the Petroleum Levy and Climate Support Levy, or, the late payment surcharge, as the case may be.

(3) Any irregularity or infirmity in the recovery proceedings under this section shall not be grounds of challenge before a tribunal or courts of
law.

(4) The Commissioner (Inland Revenue) shall be bound to submit a report every fortnight to the divisions concerned to whom subjects of finance and petroleum are allocated under the Rules of Business, 1973 on the progress of recovery proceedings, and failure to recover the amounts due shall be explained in writing.

(5) Prior to commencement of the Finance Act, 2026, where any amount of the Petroleum Levy and Climate Support Levy or the late payment surcharge are due under sections 40B and 40D of the Public Finance Management Act, 2019, it shall be recoverable under this section.”;

after section 4, the following new section (4A) shall be inserted, namely:-

“4A. Mandatory reporting mechanism for petroleum levy and climate support levy payments.— (1) Every company, refinery or licensee under this Ordinance shall submit monthly statement regarding the payment of the Petroleum Levy and Climate Support Levy on sale of petroleum products. The statement shall be supported by documentary evidence including monthly sales invoice submitted to the Federal Board of Revenue established under the Federal Board of Revenue Act, 2007 (Act No. IV of 2007) including any other document required by the relevant department from time to time.

(2) Every company, refinery or licensee under this Ordinance shall furnish an annual audited certificate to the Petroleum Division, issued by the Authorized Audit Firm, certifying the accuracy of the levy and or levies accrued and paid under this Ordinance.

Explanation: For purposes of this section, Authorized Audit Firm means an audit firm registered with the Audit Oversight Board under the
Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997).

(3) The costs and expenses of such audit shall be borne solely by the relevant company, refinery or licensee.”;

Omission of the Second Schedule, Ordinance XXV of 1961.- In the said Ordinance, the Second Schedule shall be omitted.

Omission of the Fourth Schedule, Ordinance XXV of 1961.- In the said Ordinance, the Fourth Schedule shall be omitted.

The Customs Act, 1969 (IV of 1969).- In the Customs Act, 1969 (IV of 1969), the following further amendments shall be made, namely: —

(1) in section 2, after clause (ssss), a new clause shall be added, namely: –

“(ssssa) “State warehouse” means any place authorized by the Collector of Customs to store the detained, seized or confiscated goods, as the case may be”;

(2) in section 19, in sub-section (5), in the second proviso, for the figure

“2026”, the figure “2027” shall be substituted;

(3) in section 32, —

(a) in sub-section (3), in the first proviso, the words “in a case” shall

be omitted; and

(b) in sub-section (3A), in the proviso, the words “in a case” shall be

omitted;

(4) in section 80, in sub-section (4), —

(a) after the word “examined”, a comma shall be inserted and

thereafter the word “scanned” shall be inserted; and

(b) in the proviso, after the word “examined”, the words “or scanned”

shall be inserted;

(5) in section 82, —

(a) in sub-section (1), —

(i) for the words “Federal Government”, the word “Board” shall be substituted; and

(ii) in the first proviso, after the word “waive”, the words “or reduce” shall be inserted and for the full stop at the end a colon shall be substituted and thereafter the following new proviso shall be added, namely: –

“Provided further that the Board may notify the rules to regulate the implementation of above provisions, including the process of appeal against imposed penalties and the Customs stations, goods or class of goods, where the provisions of sub-section (1) shall not be applicable.”;
and

(b) in sub-section (2), after the fifth proviso, the following new proviso shall be added, namely; –

“Provided also that the Board may authorize any person, to auction any auctionable goods, in the manner as notified by the Board.”;

(6) in section 156, in sub section (1), in the Table. —

(a) against S.No. 7A, in the third column, for the words “five hundred

thousand”, the words “ten million” shall be substituted;

(b) after S.No.62, the following S.No. shall be added, namely: –

“62 A

If any person is found to

be involved or abetting in

the removal, substitution,

damage or otherwise

tempering with any

goods, whether or not

confiscated, at any such

place as authorized by

the Collector as a State

Warehouse.

such person shall be liable

to a penalty not exceeding

two times the value of the

goods involved; and upon

conviction by a Special

Judge, shall further be

liable to imprisonment for a

period not exceeding five

years, or fine or the both.”;

and

General

following shall be substituted, namely: —

“If an officer of any authority who is duty bound under section 170
to deposit the impugned goods with customs, neglects so to do.”;

(7) in section 157, after sub-section (2), the following explanation shall be

added, namely: —

“Explanation: — The word “removal” includes, and shall be deemed to have always included, every act of carrying, transporting, depositing, harbouring, keeping, concealing, retailing, or any other act involving movement of smuggled goods.”;

(8) for section 170, the following shall be substituted, namely: —

“170. Procedure in respect of goods seized or detained by other
authorities.- Notwithstanding anything contained in any other law for the
time being in force, when any goods liable to confiscation under this Act
are detained or seized by any other authority on any violation,

irrespective of any pending proceedings under the laws of that authority,

the customs authorities upon confirmation that such goods are liable to confiscation shall intimate that authority in writing and that authority shall be bound to deposit the impugned goods with customs for further processing under this Act.”;

(9) in section 179, after sub-section (5), the following sub-section shall be

added, namely: —

“(6) Notwithstanding anything contained in this Act, or any other law for the time being in force, the Board may notify a procedure for faceless adjudication whereby adjudication proceedings shall be conducted without any face-to-face interaction between the adjudicating officer and the respondent. The virtual mode shall be in such manner as may be prescribed by the Board from time to time.”;

(10) in section 185A, after sub-section (5), the following sub-section (6) shall

be added, namely: —

“(6) Where a Special Judge during trial of an offence punishable
under this Act, is satisfied that there is any reasonable grounds for
believing that the accused has committed an illegal transfer of funds into
or out of Pakistan, he may order the freezing of the assets of the
accused, whether in his possession or in the possession of any other
person on his behalf.”;

(11) after section 196J, the following section shall be added, namely; —

“196JJ. Independent case scrutiny committee.- (1) Any Civil petition,
reference, civil petition for leave to appeal or review petition before the
High Court, the Federal Constitutional Court or the Supreme Court of

Pakistan shall only be filed by the Collector or Director of Customs, or

any officer of Customs not below the rank of Deputy Collector or Deputy Director authorized by the Collector or Director of Customs, in writing, subject to approval by an independent case scrutiny committee, as constituted by the Board under sub-section (3).

(2) The Board may constitute one or more such committees
and assign them jurisdiction which shall exercise the powers and
functions in a manner, and from the date, as may be notified by the
Board.

(3) The independent case scrutiny committee shall comprise of the following Members, namely: —

(a) a retired judge of superior judiciary who shall also

act as Chairman of the Committee;

(b) an advocate having not less than fifteen years of

experience in customs and commercial litigation
before the High Court or Supreme Court of
Pakistan; and

Director or Collector of Customs.

(4) The members shall receive such renumeration as may be prescribed by rules.

(5) Recommendations of the committee shall be binding upon the concerned Collector or Director of Customs.

(6) No suit, prosecution or other legal proceedings shall lie

against the members of the committee in relation to the decisions made under this section.”;

(12) in section 215, in clause (c), for the full stop at the end, the expression “

;or ” shall be substituted and thereafter the following new clause shall be added, namely: —

“(d) in the manner prescribed for service of a summons under the

Code of Civil Procedure, 1908 (Act V of 1908).”;

(13) The amendment set out in the First Schedule to this Act shall be made

in the First Schedule to the Customs Act, 1969 (IV of 1969): and

(14) The Fifth Schedule to the Customs Act, 1969 (IV of 1969), shall be

substituted in the manner provided for in the Second Schedule to this
Act.

Amendments in the Sales Tax Act, 1990.— In the Sales Tax Act, 1990 (VII of 1990), the following further amendments shall be made, namely: –

(1) in section 2,-

(a) after clause (1A), the following new clauses shall be inserted,

namely:-

“(1AA) “advance receipt invoice” means an invoice in the
format as may be notified by the Board from time to time; (1AAA) “algorithmic settlement mechanism” means

algorithmic settlement mechanism provided under section 26AAA of this Act”

(b) after the omitted clause (9AA), the following new clause shall be

inserted, namely:-

“(9AB) “electronic invoicing system” means such electronic

system or mechanism as may be prescribed or approved by the Board for issuance and recording of sales tax invoices in electronic form;”;

namely:-

(17A) “National faceless centre” means National faceless
centre as defined in section 32C of the Act;”;

(d) after clause (22), the following new clause shall be inserted,

namely:-

“(22)(1A) “production monitoring system” means any system or technology, used for the purposes of monitoring production and sale of goods, whether in real-time or otherwise, including such systems or technologies as may be prescribed by the Board from time to time;

(e) in clause (43A),-

(i) in sub-clause (d), after the expression, “wholesaler-cum-

retailer”, the expression “having turnover more than two

hundred million” shall be inserted;

(ii) sub-clauses (f) and (g) shall be omitted;

(iii) after omitted sub-clause (ga), the following new sub-clause

shall be inserted, namely:-

“(gb) a retailer having turnover exceeding two hundred
million rupees either by way of declaration or from

worked back value of turnover from tax deduction

under section 236G or 236H of Income Tax

Ordinance, 2001 (XLIV of 2001) during the

immediately preceding twelve consecutive months;
and” and

(iv) in sub-clause (h), for full stop at the end, a colon shall be

substituted and thereafter the following proviso shall be added, namely:-

“Provided that the Board may also exclude any person or class of persons through a notification in the official gazette.”.;

(f) in clause (44), after sub-clause (a), the following explanation shall

be added, namely:-

“Explanation.- For the removal of doubt, the term goods are delivered or made available mean the goods become ready for dispatch from the business premises including but not limited to factory, warehouse, godown or branch.”; and

(g) in clause (46), in sub-clause (j), in the first proviso, at the end, for

the colon, the full stop shall be substituted and thereafter the following expression shall be added, namely:-

“For this purpose of valuation, the Board may use the
valuation of such goods as notified by Pakistan Bureau of
Statistics immediately before the start of tax period. The Board
may also where deems fit outsource the functions of valuation of
goods to third party in the mode and manner as may be
prescribed:”;

(2) in section 6, in sub-section (2), after the first proviso, for full stop at the

end, a colon shall be substituted and thereafter the following new proviso shall be added, namely:-

“Provided further that in the case of steel melters, steel re-rollers
and composite units, the tax shall be collected on the basis of per unit
electricity consumption at the rate as prescribe by the Board, through
notification in the official Gazette. The tax so collected shall be
adjustable and the excess amount, if any, shall be refunded on monthly
basis through Board’s automated refund system to those registered
persons who integrate with the Board’s prescribed production monitoring
and digital invoicing systems.”;

(3) in section 8B, in sub-section (1), in the second proviso, for full stop at the

end, a colon shall be substituted and thereafter the following new proviso shall be added, namely:-

“Provided further also that the Board may by notification in the
official Gazette, reduce or enhance the limit provided in this sub-section
for any registered person on the basis of compliance or non-compliance
with the production monitoring, digital invoicing, e-bility, POS, or any
other electronic system prescribed by the Board for digital integration of
data.”;

(4) in section 9, for full stop at the end, a colon shall be substituted and

thereafter the following proviso shall be added, namely:-

“Provided that the issuance of debit and credit notes shall be governed by the mechanism including electronic adjustments, as may be prescribed by the Board.”;

(5) after section 11G, the following new section shall be inserted, namely:-

“11H. Faceless audit and assessment.- (1) Notwithstanding anything
to the contrary contained in any other provision of this Act, any audit
under sections 25 and 72B, any order made under section 11E, and
rectification under section 57 with respect to the cases referred to in sub-
section (2), may be made in a faceless manner as may be prescribed by
the Board from time to time.

(2) The faceless assessment under sub-section (1) shall be made in
respect of such persons or class of persons, or incomes or class of
incomes, or cases or class of cases, as may be specified by the Board.

(3) The provisions of section 25 shall apply to the audit conducted in faceless manner under this section:

Provided that where opportunity of being heard is to be provided
to the taxpayer during the course of this audit or a statement under oath
is required to be obtained from a taxpayer or any other person under
section 37 of this Act, the same shall be done through E-hearing:

Provided further that the identity of the officer, including facial and
voice identity, conducting such E-hearing shall be kept confidential.”;

(6) in section 21, in sub-section (2), after the word “invoices”, the expression

“, has committed non-compliance of sub-sections (5) and (6) of section

23 or section 40C” shall be inserted;

(7) in section 23, in sub-section (1),-

(i) for the words “supply shall issue a serially numbered tax invoice”

the expression “as well as exempt supply shall issue a tax invoice

including an advance receipt invoice, bearing a verifiable and

unique FBR invoice number” shall be substituted; and

(ii) in clause (b), after the Explanation, for the existing provisos, the

following shall be substituted, namely:-

“Provided that the Board may notify any person or class of persons who may be allowed to issue an advance receipt invoice within the notified system:

Provided further that the condition of verifiable and unique
FBR invoice number shall be applicable from a time as notified by
the Board.”;

(8) in section 25,-

(i) after sub-section (8), the following new sub-sections shall be

inserted, namely:-

“(8A) If, at any stage of the proceedings before him, if the

Commissioner is of the opinion that having regard to, —

(a) the nature and complexity of the accounts; or

(b) volume of the accounts; or

(d) multiplicity of transactions in the accounts; or

(e) specialized nature of business activity of the registered

person, and interests of the revenue, is of the opinion that
it is necessary so to do, he may, after giving the registered
person a reasonable opportunity of being heard, and with
the previous approval of the Chief Commissioner, direct

the registered person to get either any or all of the

following:—

(i) accounts re-audited by an accountant, and to

furnish a report of such audit duly signed and
verified by such accountant including answers to
the specific queries as the Commissioner may
require; or

(ii) inventory re-valued by a cost accountant, and to

furnish a report of such inventory valuation duly signed and verified by such cost accountant including answers to the specific queries as the Officer of Inland Revenue may require;

Explanation:- The accountant or the cost

accountant, as referred to in this sub-section shall be nominated by the Commissioner for the purposes of the said sub-section from amongst the panel of such accountants or cost accountants nominated by the Board.”; and

(8B) After completion of the audit, the officer of Inland Revenue shall, after obtaining the registered person’s explanation on all the issues raised in the audit, issue an audit report containing audit observations and finding.”;

(ii) in sub-section (9), for the words “completion of the audit”, the

words “issuing the audit report” shall be substituted; and

(iii) in sub-section (11),-

(a) for the words “wishes to deposit”, the word “deposits” shall

be substituted; and

(b) in the second proviso, for the words “full amount”, the

words “fifty percent” shall be substituted;

(9) after section 30A, the following new section shall be inserted, namely:-

“30AA. Faceless jurisdiction. – (1) Notwithstanding anything

contained in this Act, the Inland Revenue tax authorities appointed in National faceless center shall perform all or such functions, and exercise all or such powers under this Act as may be assigned to them in respect of such persons, or classes of persons, for such tax periods of a person through algorithms developed by the Board.

(2) The jurisdiction so assigned may be exclusive or concurrent.

(3) The Board may transfer jurisdictions in respect of persons or

classes of persons, for a specific tax period, for which the jurisdiction has
already been assigned under this section, from National faceless center
to the officer of Inland Revenue having jurisdiction under section 30 of
this Act, on the recommendation of the Chief Commissioner or on its own
accord.

(4) The Chief Commissioner appointed in the National faceless
center may request the Board to direct the officer of Inland Revenue
having jurisdiction under section 30 or any other Authority under this Act,
as it may deem fit, to conduct physical verification including nature and
size of the business, assets, investments, expenditures, and any other
information or verification required by the Chief Commissioner for
conducting any proceedings assigned to the National faceless centre:

Provided that the Board may exercise its power of allocation of

verification through an algorithm based system.

(5) Notwithstanding anything contained in any law for the time being
in force, the identity of the authority exercising jurisdiction in the National
faceless centre shall be kept confidential from the registered person, the
authorized representative of the registered person, and any
unauthorized person.

(6) No notice, order , or other communication by an authority
appointed at the National faceless centre shall be called in question or
set aside merely on the ground that such authority did not have
jurisdiction over the taxpayer under section 30 of this Act, or lack of
notified delegation of power under section 32 of this Act, or because of
the fact that identity of the authority has been kept confidential from the
taxpayer as per sub-section (5).”;

(10) after section 30DDDA, the following new section shall be inserted,

namely:-

“30DDDB. Directorate General (Field Compliance) Inland
Revenue.- (1) The Directorate General (Field Compliance) Inland
Revenue shall consist of a Director General and as many Directors,
Additional Directors, Deputy Directors, Assistant Directors and such
other officers as the Board may, by notification in the official Gazette,
appoint.

(2) The Board may, by notification in the official Gazette,–

(a) specify the functions and jurisdiction of the Directorate

General and its officers; and

(b) confer the powers of authorities specified in section 30

upon the Directorate General and its officers.”

(11) after section 32B, the following new section shall be inserted, namely:-

“32C. National faceless centre.- (1) Notwithstanding anything to the contrary contained in any of the provisions of this Act, the Board may, for the purposes of proceedings under this Act in faceless manner, establish a National faceless center (hereinafter referred to as “the Centre”) and specify its jurisdiction, powers, and functions.

(2) The centre shall comprise a Director General and as many officers of Inland Revenue along with support staff, as the Board may deem fit for the purposes of this section.

(3) The Board may design algorithms for assigning any function or
jurisdiction under this section to any of the authorities mentioned in sub-
section (2).

(4) The centre shall comprise as many wings and units as may be prescribed by the Board.

(5) The functions of audit, assessment, and quality control in a
specific case for a specific tax period shall be performed by separate
officers.

(6) All communications, among the units, or with the registered
person, or an authorized representative of the registered persons, or with
any other person with respect to the information or documents or
evidence or any other details, as may be necessary, shall be through
electronic means.”;

(12) in section 33, in the Table, in column (1),-

(a) against S. No. 1, in column (2),—

(i) for the word “ten “, the word “fifty ” shall be substituted; and

(ii) in the proviso, for the word ” hundred”, the word ” thousand

” shall be substituted;

(b) against S. No. 2, in column (2), for the expression “five thousand

rupees or three per cent”, the expression “twenty-five thousand

rupees or five per cent” shall be substituted;

(i) for the word “ten “, the word “fifty” shall be substituted; and

(ii) for the word “five”, the word “ten” shall be substituted;

(d) against S. No. 5, in column (2),—

(i) for the expression “ten thousand rupees or five per cent of

the amount of the tax involved, whichever is higher”, the
expression “fifty thousand rupees or five per cent of the
amount of the tax involved, whichever is higher” shall be
substituted; and

(ii) in the first proviso, for the word ” hundred”, the word

“thousand” shall be substituted;

(e) against S. No. 7, in column (2), for the word “ten”, the word “fifty”

shall be substituted;

(f) against S. No. 8, in column (2), for the word “ten”, the word “fifty”

shall be substituted;

(g) against S. No. 25, in column (1) and entries related thereto in

column (2), the following shall be substituted, namely:-

Any person, who is
required to integrate

his business for
monitoring, tracking,
reporting or recording
of sales, production
and similar business
transactions with the

Board or its computerized

system, fails to get
himself registered
under this Act, and if
registered, fails to

integrate in the
manner as required
under law within the
stipulated time as
notified by the Board.

Such person shall be liable to pay a penalty up to one million rupees, if he continues to commit the offence after one month of the
imposition of first penalty, he shall be liable to second penalty of up to five million rupees.

Notwithstanding, his business
premises shall be liable to be
sealed with or without imposition
of penalty by an officer of Inland
Revenue in the manner as may be
prescribed.

(h) after S. No. 28, the following new S. Nos. and entries relating

thereto in columns (1), (2) and (3) shall be added, namely:—

Where any (i) Such person shall 2(37)

registered pay a penalty equal to

person issues a the face value of the

tax invoice for a simulated or fictitious

transaction invoice or invoices.

which is (ii) The Board shall,

simulated or after issuance of a

fictitious, or for show cause notice and

which no actual an opportunity of being

supply of goods heard, place the name

or services has and registration

taken place, as number of such person

established on a publicly accessible

after notice and simulated invoice

adjudication. issuers register

maintained on the
Board’s computerized
system.

(iii) Any input tax credit

claimed by a

counterparty on the
basis of invoices issued
by a person on the

simulated invoice

issuers register shall be
reversed automatically

and treated as

inadmissible with effect

from the date of listing.

(iv) Listing on the

removed upon full
payment of the penalty
and default surcharge,
and upon satisfactory

demonstration of

compliance.

Where the Board’s

computerized

system identifies that
input tax credit

claimed by a
registered person in
respect of any tax
period cannot be

matched to corresponding

output tax declared
by the supplier for
the same or

Such person shall pay 7, 8A a penalty of twenty per

cent of the unmatched
input tax amount, in
addition to reversal of
the inadmissible credit
and payment of default
surcharge under
section 34.

proximate tax period,

and such mismatch
is confirmed after
issuance of notice
and provision of
opportunity of being
heard.

Where a

registered person
has claimed input tax
credit on the basis of
invoices issued by a

person who is
subsequently placed
on the simulated

invoice issuers
register under S. No.

29, and such

registered person
fails to reverse the
inadmissible input
tax credit within sixty
days of the listing of

Such person shall pay 7, 8A, 33
a penalty of twenty per (S.No.29)

cent of the unreversed

input tax credit, in addition to the reversal of such credit and default surcharge under section 34.

the invoice issuer on

the register.

(13) in section 40C,-

(a) for sub-sections (2) and (3), the following shall be

substituted, namely:-

“(2) From such date as may be prescribed by the Board,

no taxable goods shall be removed or sold by the
manufacturer or any other person unless such goods
are affixed with tax stamps, band role stickers or
labels are monitored through a Production
Monitoring System, video analytics or any other
prescribed monitoring mechanism, etc. in any such
form, style and manner as may be prescribed by the
Board in this behalf;

(3) Such tax stamps, banderols, stickers, labels,

barcodes, production monitoring equipment etc.,
shall be acquired by the registered person referred
to in sub-section (2) from a licensee appointed by the
Board.”; and

(b) after the omitted sub-section (5), the following new sub-

section shall be added, namely:-

“(6) Any taxable goods in respect of which monitoring,
tracking or identification has been prescribed under this
Act or rules made thereunder, which are manufactured,
produced, removed, transported, supplied or otherwise

dealt with or without affixing the prescribed tax stamps,

banderoles, stickers, labels, barcodes or without
compliance with the prescribed monitoring system, shall
be liable to seizure and confiscation in the prescribed

manner, along with the conveyance used for the
movement, carriage or transportation of such goods.”;

(14) after section 40E, the following new section shall be inserted,

namely:-

“40F. Sale of confiscated goods by auction.- (1) Where any goods

liable to confiscation under any provision of this Act have been
confiscated, these goods, without prejudice to other action
specified against such goods, shall be sold by public auction.

(2) The goods may be sold under sub-section (1) through electronic means, as prescribed by the Board.

(3) For the purpose of sub-sections (1) and (2) of this section, the Board shall be bound by Public Procurement Regulatory Authority Rules, 2014.

(4) The sale proceeds shall be applied to the following purposes in their respective order, namely:-

(a) first to pay the expenses of the sale;

(b) then to pay the sales tax, other taxes and

dues including penalty and surcharge payable to the Federal Government in respect of such goods; and

excluding those liable for outright
confiscation, if any, shall be paid to the
owner of the goods, provided he applies for

it within six months of the sale of the goods failing which the balance amount shall be deposited into government treasury:

Provided that, in case wherein goods declaration has been filed, the share of importer in sale proceeds shall not exceed the declared value of the goods.”;

(15) after section 45B, the following new section shall be inserted,

namely:-

“45C. Faceless appeals. – (1) Notwithstanding anything contained in this Act, any appeal filed under section 45B of this Act may be processed through the National faceless center as may be prescribed by the Board.

(2) The provisions of section 45B of this Act, shall apply to faceless appeals accordingly.

(16) after section 47A, the following new sections shall be inserted,

namely: –

“47AA. Algorithmic settlement mechanism.- (1)

Notwithstanding anything contained in this Act, the Board may
establish digitally operated algorithmic settlement mechanism
(hereinafter referred to as “the mechanism”) for settlement of tax

proceedings at any stage before any order under sections 11D or

11E of the Act.

(2) In case, the mechanism calculates and presents to the registered person a settlement offer as per the criteria provided under sub-section (3), the registered person may avail the offer as provided in sub-section (4).

(3) The system generated settlement offer shall be calculated on the basis including but not limited to:

(a) the stage of proceedings at which settlement is

offered;

(b) the registered person’s compliance history, as

maintained in FBR’s data;

(d) any other basis the Board may consider relevant.

(4) A registered person who opts to avail this mechanism shall

within ten days from the date of settlement offer to accept the
settlement offer on IRIS and deposit the settlement offer amount.

(5) The issues confronted to the registered person, if any, through a notice or an audit report under this Act shall stand abated if the registered person deposits the settlement amount as provided in sub-section (4).

(6) Payment of tax consequent upon acceptance of offer

under sub-section (4) of this section shall not preclude

proceedings in respect of any other issue or discrepancy not

covered by the settlement offer, nor shall it affect proceedings for

any other tax period.

“47AAA. Independent case scrutiny committee. – (1) A
reference under section 47 before the High Court, or an appeal or
review before the Federal Constitutional Court or the Supreme
Court of Pakistan, as the case may be, shall only be filed by the
Commissioner Inland Revenue after the same has been
approved by an independent case scrutiny committee as
constituted by the Board.

(2) The Board may constitute one or more such committees
and assigned them cases or classes of cases decided by the
Appellate Tribunal Inland Revenue or the High Court as the case
may be.

(3) The Committee shall comprise of the following Members as nominated by the Board –

(a) a retired judge of Supreme Court of Pakistan, the

Federal Constitutional Court, or any of the High Courts of Pakistan who shall also act as Chairman of the Committee;

(b) an Advocate having not less than fifteen years of

experience in tax and commercial litigation before
the High Court or Supreme Court of Pakistan, to be
nominated from a panel notified by the Board from
time to time; and

or above).

(4) The powers, functions, and procedure of the Committee
along with remuneration of its Members shall be governed as
prescribed.

(5) Recommendations of the committee shall be binding upon
the Commissioner Inland Revenue having jurisdiction over the
case.

(6) Notwithstanding anything contained in any other law for
the time being in force, no suit, prosecution, or other legal
proceedings shall lie against the Members of the Committee and
the Commissioner Inland Revenue having jurisdiction over the
case, in relation to the decisions made under this section.;

(7) The Committee constituted under this sub-section shall exercise its powers and functions with effect from the date of its constitution as notified by the Board.”;

(17) in section 56B, after sub-section (2), the following new sub-

section shall be added, namely:-

“(3) Notwithstanding anything contained in sub-section (1), the Board shall have the power to share data contained in Sales Tax returns of registered persons belonging to a sector amongst all registered persons of the same sector under strict non-disclosure agreements to create market equity and to enhance tax compliance subject to such limitations, restrictions and conditions as may be specified by the Board.”;

(18) in the Third Schedule, in the Table, in column (1), after Serial No.

55, the following new Serial Nos. and entries relating thereto in

columns (2) and (3) shall be added, namely:—

“56.

Vegetable and animal fats and oils, sold in

retail packing.

Respective

headings

56.

Sugar Confectionary, sold in retail packing.

Respective

headings

57.

Pasta, whether or not cooked or stuffed

(with meat or other substances) or

otherwise prepared, such as spaghetti,

macaroni, noodles, lasagne, gnocchi,

ravioli, cannelloni; couscous, whether or

not prepared, sold in retail packing.

19.02

58.

Sauces, ketchup and other preparations

therefor; mixed condiments and mixed

seasonings; mustard flour and meal and

prepared mustard, sold in retail packing.

Respective

headings

59.

Fermented beverages, sold in retail

packing.

Respective

headings

60.

Petroleum jelly, paraffin wax, micro-

crystalline petroleum wax, slack wax,

ozokerite, lignite wax, peat wax, other

mineral waxes, and similar products

obtained by synthesis or by other

27.12

processes, whether or not coloured, sold in

retail packing.

61.

Insecticides, rodenticides, fungicides,

herbicides, anti- sprouting products and

plant- growth regulators, disinfectants and

similar products, put up in forms or

packings for retail sale or as preparations

or articles put up in forms or packings for

retail sale.

38.08

62.

Plates, sheets, film, foil, tape, strip and

other flat shapes, of plastics, whether or not

in rolls, sold in retail packing.

39.19,

39.20,39.21

63.

Tableware, kitchenware, plastic furniture,

storage items, hygienic or toilet articles,

and allied other household articles of

plastics, sold in retail packing.

Chapter 39

64.

Trunks, suit- cases, vanity- cases,

executive- cases, briefcases, school

satchels, spectacle cases, binocular cases,

camera cases, musical instrument cases,

gun cases, holsters and similar containers;

travelling- bags, insulated food or

beverages bags, toilet bags, rucksacks,

handbags, shopping- bags, wallets,

purses, map- cases, cigarette- cases,

42.02

tobacco- pouches, tool bags, sports bags,

bottle- cases, jewellery boxes, powder-

boxes, cutlery cases and similar

containers, of leather or of composition

leather, of sheeting of plastics, of textile

materials, of vulcanised fibre or of

paperboard, or wholly or mainly covered

with such materials or with paper, put up for

retail sale.

65.

Footwear (all types)

Respective

headings

66.

Bathroom accessories and bath items,

sanitaryware including taps, showerheads,

fittings, mixers, valves and other washroom

accessories and fixtures, sold in retail

packing

Respective

headings

67.

Crockery Items, sold in retail packing

Respective

headings

68.

Car and automobile accessories, sold in

retail packing

Respective

headings

69.

Milk, fat filled milk, preparations suitable for

infants, and other products of milk, sold in

retail packing

Respective

headings

70.

Preparations for use on the hair, sold in

retail packing

33.05

71.

Pre- shave, shaving or after- shave

preparations, personal deodorants, bath

preparations, depilatories and other

perfumery, cosmetic or toilet preparations,

not elsewhere specified or included;

prepared room deodorisers, whether or not

perfumed or having disinfectant properties,

sold in retail packing

33.07

72.

Toilet or facial tissue stock, towel or napkin

stock and similar paper of a kind used for

household or sanitary purposes, cellulose

wadding and webs of cellulose fibres,

whether or not creped, crinkled, embossed,

perforated, surface- coloured, surface-

decorated or printed, in rolls or sheets, put

up for retail sale.

4803.0000, 48.18

73.

Jams, fruit jellies, marmalades, fruit or nut

puree and fruit or nut pastes, obtained by

cooking, whether or not containing added

sugar or other sweetening matter, other

fruit and vegetable preparations, sold in

retail packing

20.07, 20.08

74.

Household utensils, including Stainless

steel, aluminum, melamine and other

utensils and tableware.

Respective

headings

75.

Ceramic Products including wash basins,

commodes, tiles and allied ceramic

sanitary products, put up for retail sale.

69.10”;

Note: Where the Federal Government has notified that the sales tax

shall be charged, levied and paid at a rate higher than eighteen percent, the same rate shall continue to be charged, levied and paid after their inclusion under the Third Schedule.

(19) in the Sixth Schedule,

(a) in Table-1, in column (1),-

(i) for Serial No. 32 and entries relating thereto in

columns (2) and (3), the following shall be substituted,

namely: –

“32

Newsprint, books, and

magazines but excluding

brochures, leaflets and

directories.

4902.1000, and

4902.9000”

(ii) against serial number 157, in corresponding column

(2), for the expression “2026”, the expression “2027” shall be substituted;

(iii) for serial number 181, and corresponding entries

relating thereto in columns (2) and (3), the following

shall be substituted, namely:-

“181.

Import or lease of aircrafts and

parts thereof by Pakistan

8802.1200

8802.3000

8802.4000

International Airlines Corporation

Limited (PIACL)

Provided that the custom

authorities shall ensure that the

quantities of things imported are

limited to the requirements of

materials and articles to be used

in operations and maintenance of

the aircrafts operated by the

airline:

Provided further that the

ground handling equipment,

service and operation vehicles,

catering equipment and fuel

trucks, not manufactured locally,

and imported shall be used within

airport premises as aforesaid.

8801.0000,

8802.2000,

8804.0000

8805.2900

8807.3000

9104.0010

8544.2000

7007.1900

and 9931.”

(iv) after Serial No 181, the following new Serial Nos. and

entries relating thereto in columns (2) and (3) shall be added, namely: –

“182

Contraceptives

3926.9020 and

4014.1000

183

Female Sanitary Pads /

Tampons

9619.0030

184

Import of:

– Tankers,

– Dredgers,

– Floating or submersible

drilling, or production

platforms,

– Others floating

structures and vessels.

– Other vessels for the

transportation of goods

Excluding Cruise ships,

excursion boats and

similar vessels principally

designed for the transport

of persons; ferry- boats of

all kinds

Provided that the quantity

of imported goods under

this entry shall be

approved by Ministry of

Maritime Affairs

8901.2000

8905.1000

8905.2000

8905.9000

8901.9000

185.

Import of bullet proof

vehicles by the:

(i) Federal Government for

logistic arrangements for

Respective

heading.”

Shanghai Cooperation

Organization (SCO)

summit subject to the prior

approval from the Ministry

of Foreign Affairs and the

Ministry of Interior and

Narcotics Control

(ii) By the Federal

Government or Provincial

Government for threat of

terrorism against a public

functionary as determined

by the Ministry of Interior

and Narcotics Control,

subject to approval by the

Federal Government.

(b) in Table-3, in Annexure, in column (1), after Serial No 22, the

following new Serial Nos. and entries relating thereto in columns

(2), (3) and (4) shall be added, namely:—

“23

Import of following

machinery/

equipment for

upgradation of

existing refineries:

1. Reactors,

8419.8990,

8419.5000,

The goods shall

be imported

directly by the

refinery after

approval by the

2. Shell and Tube

Exchangers,

3.Vessels

(Strippers/

Separators/ K.O.

Drums),

4. Trim Coolers,

5. Air Coolers

(Condensers),

6. Fired Heaters,

7. Centrifugal

Pumps,

8. Reciprocating

Pumps,

9.Centrifugal

Compressors,

10.Reciprocating

Compressors,

11. Steam Reformer

Furnaces,

12 Filters,

Provided that all

such imports shall

be essentially made

for expansion of

8419.8990,

8418.6990,

8419.8990,

8417. 8000

8413.7090

8413.5000

8414.8090

8417.8000,

8421.3990

division

concerned.

balancing,

modernization, and

rehabilitation of

existing refineries

and the quantity

imported by each

refinery shall be

approved by Ministry

of Petroleum and

Natural Resources.

Import of machinery,

equipment, raw

materials,

components and

other capital goods,

by Karachi Shipyard

and Engineering

Works Limited

Respective

headings as

approved by

the

concerned

Division.

The Division

dealing with the

subject matter

shall certify in the

prescribed

manner and

format as per

Annex-B that the

imported goods

are bona fide

requirement.

The authorized

officer of the

Ministry shall

furnish all

relevant

information

online to Pakistan

Customs

Computerized

System against a

specific user ID

and password

obtained under

section 155D of

the Customs Act,

1969.”;

(20) in the Eighth Schedule, in Table: —

(a) against serial No. 71, in column (2), for the words “30th
June, 2026”, the words “30th June, 2027” shall be

substituted; and

(b) for serial No. 80 in column (1), and corresponding entries
relating thereto in columns (2), (3) and (4), the following

shall be substituted, namely: –

“80.

EV transport buses of 25 seats or

more and electric trucks in CBU

condition

8702.4090

8704.6030

1%”

(21) in the Eleventh Schedule, in the Table, in column (1), –

(a) against serial No. 4, in column (2), after the word

“companies”, a comma shall be added, and thereafter the

words “association of persons and individuals” shall be

added; and

(b) after S. No. 13, the following new S. No. and entries

relating thereto in columns (2), (3) and (4) shall be added,

namely:-

“14.

Registered

persons engaged

in toll

manufacturing

Person other

than registered

person

four times of the

tax charged on

conversion

charges.”;

(22) in the Twelfth Schedule, after the Table, under the heading,

“Procedure and Conditions”, in clause (2), after sub-clause (i), a colon shall be added and thereafter the following provisos shall be inserted, namely: —

“Provided that the manufacturer shall be liable to pay 3%
value addition tax on ad valorem basis, along with default
surcharge in case the imported goods are supplied in the same
state whether in the same packing, repacked, or in bulk:

Provided further that where-

(i) benefit of waiver of 3% value addition tax is availed,

declaring that the goods are imported for in-house consumption in manufacturing process;

(ii) such imported goods are not used for in-house

consumption;

(iii) imported goods are supplied in the same state

whether in the same packing, repacked, or in bulk;
and

(iv) such supply exceeds 50% of total imports in a

financial year;

such person will be liable to prosecution.”.

Amendments in the Income Tax Ordinance, 2001 (XLIX of 2001). — In the Income Tax Ordinance, 2001 (XLIX of 2001), the following further amendments shall be made, namely: –

(1) in section 2, —

(a) after clause (1A), the following new clause shall be inserted,

namely: —

“(1AA) “algorithmic settlement mechanism” means

algorithmic settlement mechanism provided under section 134B of this Ordinance;”;

(b) in clause (5), for the words “and amended assessment”, the

expression “, amended assessment and faceless assessment” shall be substituted;

namely: —

“(6A) “authorised shipping agent” means a person in Pakistan

who is authorised, expressly or impliedly, by a non-
resident ship owner, charterer or operator to act on its
behalf in respect of a vessel, and who in relation to such
vessel or voyage —

(a) is responsible for the receipt, collection, control or

accounting of total freight and any related amounts,
and undertakes or is responsible for documentation,
manifest filing, or reporting of cargo or total freight,

including having, directly or indirectly, the control, custody or disposal of any freight or related receipts attributable to such vessel or voyage; and

(b) furnishes the return under section 143 of this

Ordinance, in respect of such vessel or voyage and
such person shall, for the purposes of this
Ordinance —

(i) be treated as the representative of the non-

resident under section 172;

(ii) be jointly and severally liable for payment of

tax and all obligations, proceedings, assessments and recovery in respect of such vessel or voyage; and

(iii) be treated as such, and the provisions of

sub-section (3) of section 172 shall apply accordingly;”;

(d) after clause (19D), the following new clause shall be inserted,

namely:—

“(19DA) “electronically readable format” means any digital

format in which data is structured so that it can be
automatically read, extracted, validated and

processed by computer systems without human

intervention, including spreadsheet formats (such
as CSV or XLSX), XML, XBRL, JSON, and other
structured or semi-structured data formats but
excluding formats primarily designed for human
readability, such as PDF, scanned images or
photographs;”;

(e) clause (22A), shall be omitted;

(f) in clause (30A), for the expression “Board through approved fiscal

electronic device and software”, the expression “Board’s

computerized system through a licensed integrator” shall be substituted;

(g) after clause (30C), the following new clause shall be inserted,

namely:-

“(30D) “Licensed integrator” shall have the same meaning as
defined under clause (15A) of section 2 of the Sales Tax Act, 1990
(VII of 1990);

(h) after clause (35A) the following new clause shall be inserted,

namely:—

“(35)(1A) “National faceless center” means National faceless center as defined in section 227D of this Ordinance;”;

(i) after clause (42A), the following new clause shall be inserted,

namely:-

“(42AA) “PRAL” means Pakistan Revenue Automation (Pvt)
Limited, a State Owned Enterprise which has been assigned

functions related to software development and maintenance of

the Board’s IT infrastructure;”; and

(j) clause (60) shall be omitted;

(2) in section (4AB), —

(a) in the heading, for expression “(4AB), the expression “4AB” shall

be substituted; and

(b) in the proviso, for the words “a surcharge shall be payable at the
rate of nine percent of the income tax imposed under Division I of Part I
of the First Schedule where the income exceeds rupees ten million in a
tax year”, the expression “no surcharge shall be payable.”; shall be
substituted;

(3) in section 6A, after sub-section (2), the following new sub-section shall

be added, namely:—

“(3) Notwithstanding the provisions of section 8, the tax

imposed under this section on a person, whose turnover in a tax year

exceeds two hundred million rupees shall be adjustable.”;

(4) section 7E shall be omitted;

(5) after section 7F, the following new section shall be inserted, namely: —

“7G. Tax on certain payments by life insurance business. —

(1) For tax year, 2026 and onwards, a tax shall be imposed, at the rate
specified in Division IC of Part III of the First Schedule on every individual
who receives any payout, benefit, surrender value, maturity proceeds or
similar payment (hereinafter referred to as payout) from a life insurance
business on account of insurance policy, family takaful certificate, plan
or any similar arrangement.

(2) For the purposes of sub-section (1), the amount liable to
tax shall be the gross amount of payout reduced by aggregate amount
of premiums or contributions paid by the policy holder or participant.”;

(3) The provisions of sub-section (1) shall not apply where the payout or benefit is made—

(a) on account of death of the insured or participant;

(b) on account of disability of the insured or participant;

issuance of the policy, certificate or plan.

(4) Tax deducted under this section shall be treated as final tax on the income arising from such payout or benefit.”;

(6) in section 8, —

(a) in the heading, for the expression “7E”, the expression “7G” shall

be substituted; and

(b) in sub-section (1), for the expression “7E”, wherever occurring,

the expression “7G” shall be substituted;

(7) in section 21, for clause (r), the following shall be substituted, namely: —

“(r) up to five percent of the expenditure claimed by any person, who

fails to install electronic resource or to act as an integrated enterprise as required by law, subject to the method, manner, and procedure as may be prescribed;”;

(8) after section 53, the following new section shall be inserted, namely:-

“53A. Rationalization of rates of withholding taxes in the
nature of minimum tax. – (1) The Federal Government may reduce the
rate of any of the withholding taxes in the nature of minimum tax as given
in First Schedule of this Ordinance, other than minimum tax chargeable
under section 113 of this Ordinance, up to 1% on the basis of economic
viability in cases of persons or class of persons, subject to such
restrictions and limitations as the Federal Government may specify.

(2) The Federal Government shall place before the National

Assembly all amendments made in rates of withholding taxes in the First Schedule, in a financial year under this section.”;

(9) for section 64D, the following shall be substituted, namely: —

“64D. Tax credit for integration. — (1) Any person required,
under this Ordinance, the Sales Tax Act, 1990 or the Federal Excise Act,
2005, to integrate with the computerized system of the Board for real-
time production monitoring, or for the recording or reporting of sales or
receipts, shall be entitled to a tax credit in respect of expenditure incurred
exclusively on the purchase, acquisition, installation or implementation
of such equipment, hardware, software or other electronic components
as are directly and exclusively utilized for the purposes of such
integration:

Provided that the Board may prescribe limitations, conditions, and restrictions for availing the tax credit under this section.

(2) The amount of tax credit allowed under sub-section (1) for
a tax year in which electronic resource is installed, integrated and
configured with the Board’s computerized system shall be ten percent of

the amount actually invested in the electronic resource.

(3) Such tax credit shall not be allowable against operation and maintenance expenses related to such electronic resource.

(4) This tax credit shall be available only against normal tax
payable under Division I or Division II of Part I of the First Schedule.”;

(10) in section 76, after sub-section (8), a new sub-section (8A) shall be

added:

“(8A) Where an immovable property is acquired by an individual

through inheritance, the cost of such property in the hands of that individual shall be the fair market value of the property as provided under sub-section (5) of section 68 of this Ordinance on the day of the death of the original owner.”;

(11) In section 79, in sub-section (1), in clause (b), the following explanation

shall be insertred, namely: —

“Explanation: For the removal of doubt it is clarified that
transmission of an asset, in the nature of immovable property, to
a beneficiary on the death of a person shall also include the
transmission of assets by reason of family settlement amongst
the family members consequent upon death of the person.”;

(12) in section 80, in sub-section (2), in clause (a), after the word “person”,

the expression “, limited liability partnership” shall be inserted;

(13) in section 92, —

(a) in sub-section (1), the explanation shall be omitted; and

(b) after the omitted sub-section (4), the following new sub-section

shall be inserted, namely: —

“(4A) Where the income of a limited liability partnership is
exempt from tax, the amount received by a member of a limited
liability partnership in the capacity as a member of such
partnership shall be taxable in the hands of the member of such
partnership.”;

(14) in section 99B, for the expression “and payment of tax, filing of return”,

the expression”, rate and payment of tax including fixed tax, filing of

return, audit” shall be substituted;

(15) in section 100B, –

(a) in sub-section (2), —

(i) in clause (b), the expression “, a non-banking finance

company,” shall be omitted and after the semicolon at the

end, the word “and” shall be added; and

(ii) clauses (c) and (d) shall be omitted;

(b) after sub-section (2), amended as aforesaid, the following new

sub-section shall be added, namely: –

“(3) NCCPL, in case of banking company, insurance
company and mutual funds shall compute and determine the
capital gain as per the mechanism prescribed under section 37A,
however, these entities shall continue to deposit tax on amount of
capital gain as per the applicable provisions of this Ordinance.”;

(16) in section 114, —

(a) for sub-section (2A), the following shall be substituted, namely: —

“(2A) A return of income shall be filed electronically on
IRIS as may be prescribed by the Board for the purpose of sub-
section (1) and sub-section (1A) of this section and the Board
may, by notification in the official Gazette, make rules for such
filing and determine the process of verification, digital signatures
and other matters relating to electronic filing of returns,
statements or documents, etc.:

Provided that in case of companies for tax year, 2026 and

onwards the financial statements accompanying the return shall only be filed in electronically readable file format.”;

(b) in sub-section (6), after the word “therein”, the expression, “or

avails a settlement offered by algorithmic settlement mechanism” shall be inserted

inserted, namely:-

“(6B) Notwithstanding anything contained in sub-sections

(6) and (6A) of this section, if a taxpayer avails a settlement offered by the algorithmic settlement mechanism, he may file a revised return, and the —

(a) approval of Commissioner shall not be

required to file the revised return;

(b) taxpayer shall pay the amount of tax

determined by the mechanism and no separate penalty or default surcharge shall be payable; and

documents as required under sub-section (6)
and shall be treated as revised return under
this section.”;

(17) after section 122D, the following new section shall be inserted, namely:

–

“122E. Faceless audit and assessment. – (1)

Notwithstanding anything to the contrary contained in any other provision
of this Ordinance, any audit under sections 177 or 214C, any order made
under section 111, any assessment under this Part and rectification
under section 221, with respect to the cases referred to in sub-section

(2), may be made in a faceless manner as may be prescribed by the
Board.

(2) The faceless assessment under sub-section (1) shall be
made in respect of such persons or class of persons, or incomes or class
of incomes, or cases or class of cases, as may be specified by the Board.

(3) The provisions of section 177 shall apply to the audit conducted in faceless manner under this section:

Provided that where opportunity of being heard is to be provided to the taxpayer during the course of this audit or a statement under oath is required to be obtained from a taxpayer or any other person under section 176 of this Ordinance, the same shall be done through E-hearing under section 227E of this Ordinance:

Provided further that the identity of the officer, including facial and
voice identity, conducting such E-hearing shall be kept confidential.”;

(18) after section 129, the following new section shall be inserted, namely, –

“129A. Faceless appeals. – (1) Notwithstanding anything

contained in this Ordinance, any appeal filed under section 127 may be
processed through the National faceless center as may be prescribed by
the Board.

(2) The provisions of sections 127, 128, and 129 of this

Ordinance, shall apply to faceless appeals accordingly.”;

(19) after section 133, the following new section shall be inserted, namely: –

“133A. Independent case scrutiny committee. – (1) A

reference under section 133 of this Ordinance before the High Court, or an appeal or review before the Federal Constitutional Court or the Supreme Court of Pakistan shall only be filed by the Commissioner Inland Revenue after the same has been approved by an independent case scrutiny committee as constituted by the Board.

(2) The Board may constitute one or more such committees and assign them cases or classes of cases decided by the Appellate Tribunal Inland Revenue or the High Court, as the case may be.

(3) The Committee shall comprise of the following Members as nominated by the Board –

(a) a retired judge of the Supreme Court of Pakistan,

the Federal Constitutional Court, or any of the High Courts of Pakistan who shall also act as Chairman of the Committee;

(b) an Advocate having not less than fifteen years of

experience in tax and commercial litigation before
the High Court or Supreme Court of Pakistan, to be
nominated from a panel notified by the Board from
time to time; and

or above).

(4) The powers, functions, and procedure of the committee

along with remuneration of its Members shall be governed as may be prescribed by the Board.

(5) Recommendations of the committee shall be binding upon
the Commissioner Inland Revenue having jurisdiction over the case.

(6) Notwithstanding anything contained in any other law for the time being in force, no suit, prosecution, or other legal proceedings shall lie against the Members of the committee and the Commissioner Inland Revenue having jurisdiction over the case, in relation to the decisions made under this section.

(7) The Committee constituted under this sub-section shall exercise its powers and functions with effect from the date of its constitution as notified by the Board.”;

(20) in section 134A, —

(a) after sub-section (10), the following new sub-section shall

be inserted, namely:-

“(10A) Notwithstanding the dissolution of the
committee, the committee may, by an order in writing,
rectify any mistake apparent from the record on its own
motion or any mistake brought to its notice by the taxpayer
or the Commissioner, within thirty days of the receipt of
decision of the committee by the taxpayer or the
Commissioner, as the case may be.”; and

(b) in sub-section (11), in the proviso for the full stop at the

end, a colon shall be substituted and thereafter the
following new proviso shall be added, namely: –
“Provided further that where, at any stage of the proceedings, any member of the committee becomes unavailable or is unable to perform his functions for any reason whatsoever, the Chairman of the Board shall, within fifteen days of the occurrence of such vacancy, appoint another person in accordance with the provisions of sub-section (3) of this section to fill such vacancy, and the committee so reconstituted shall continue to function subject to the same terms, conditions and limitations as were applicable to the original committee:

Provided also that upon such reconstitution, the
committee shall be allowed a further period of sixty days to
conclude the proceedings and perform its functions under
this section:

Provided also that the total period available to the committee, including the period already consumed prior to such reconstitution, shall in no case be less than ninety days from the date of its original constitution.”;

(21) after section 134A, as amended above, the following new section shall

be inserted, namely:-

“134B. Algorithmic settlement mechanism. — (1)

Notwithstanding anything contained in this Ordinance, the Board may

establish digitally operated algorithmic settlement mechanism

(hereinafter referred to as “the mechanism”) for settlement of tax
proceedings at any stage before any assessment or amendment of
assessment order under sections 121, 122 or 122E of this Ordinance
through revision of return under sub-section (6) of section 114 in certain
cases.

(2) In case, the mechanism calculates and presents to the taxpayer a settlement offer for voluntary revision of return as per the criteria provided under sub-section (3), the taxpayer may avail the offer as provided in sub-section (4).

(3) The system generated settlement offer shall be calculated on the basis including but not limited to –

(a) the stage of proceedings at which settlement is
offered;

(b) the taxpayer’s compliance history, as maintained in

FBR’s data;

including whether it involves a valuation or legal interpretation dispute, unexplained income or assets, or concealment; and

(d) any other basis the Board may consider relevant to

ensure revenue adequacy and equitable treatment of taxpayers.

(4) A taxpayer who opts to avail this mechanism shall within ten days from the date of settlement offer to –

(a) accept the settlement offer on IRIS;

(b) deposit the settlement offer amount along with

revised return; and

the settled amount.

(5) The issues confronted to the taxpayer through notice of selection of audit, a notice under section 111, an audit report under sub-
section (6) of section 177, a notice under sub-section (9) of section 122, as the case may be, shall stand abated, if the taxpayer revises the return by accepting the offer as provided in sub-section (4).

(6) Revision of return consequent upon acceptance of offer under sub-section (4) of this section shall not preclude proceedings in respect of any other issue or discrepancy not covered by the settlement offer, nor shall it affect proceedings for any other tax year.”;

(22) in section 143, –

(a) in sub-section (1), after the word “ship”, occurring for the second

time, the expression “, or the authorised shipping agent as defined in

clause (6A) of section 2,” shall be inserted;

(b) after sub-section (1), amended as aforesaid, the following new

sub- sections shall be inserted, namely: –

“(1A) Notwithstanding anything contained in this Ordinance, only one return shall be furnished for each vessel or voyage, and such return shall cover the total freight and all related amounts attributable to the ship.

(1B) The master of ship or the authorised shipping agent

responsible for manifest filing and freight handling in respect of a
vessel shall furnish the return under this section, and no other
person shall furnish such return for that vessel or voyage.”;

(i) after the word “ship”, occurring for the first time, the

expression “or authorised shipping agent” shall be

inserted; and

(ii) after the word “master”, the words “or authorised shipping

agent” shall be inserted;

(d) in sub-section (3), for the words “shall be”, the words “or
authorized shipping agent shall be jointly and severally” shall be
substituted;

(e) in sub-section (4), after the word “ship” occurring for the second

time, the words “or authorised shipping agent” shall be inserted
and after the word “charterer”, occurring for the second time, the
expression “or authorised shipping agent” shall be inserted;

(f) in sub-section (5), after the word “Commissioner”, occurring at the

end, the words “and electronic confirmation of filing of return and

payment of tax under this section has been received in the

prescribed manner” shall be inserted; and

(g) in sub-section (6), after the word “ship”, occurring for the second

time, the words “or authorised shipping agent” shall be inserted;

(23) in section 147, sub-section (6C) shall be omitted;

(24) after section 151A, the following new section shall be inserted, namely:

–

“151B. Certain payments by life insurance companies and
takaful operators. — (1) Every life insurance company, including a
family takaful operator or a window takaful operator, making any payout,
benefit, surrender value, maturity proceeds or similar payment to an
individual under a life insurance policy, family takaful certificate, plan or
arrangement shall, at the time of making such payment, deduct tax at
the rate specified in Division IC of Part III of the First Schedule.

(2) For the purposes of sub-section (1), the amount liable to tax deduction shall be the gross amount of payout or benefit reduced by the aggregate amount of premiums or contributions paid by the policyholder or participant.

(3) The provisions of sub-section (1) shall not apply where the payout or benefit—

(a) is made on account of death of the insured or participant;

(b) is made on account of disability of the insured or

participant; or

date of issuance of the policy, certificate or plan.

(4) Tax deducted under this section shall be treated as final tax on the income arising from such payout or benefit.”;

(25) in section 152, for sub-section (1DA), the following shall be substituted,
namely:-

“(1DA)Every banking company maintaining a Foreign Currency

Value Account (FCVA), Foreign Currency Business Value Account
(FCBVA), Non-Resident Rupee Value Account (NRVA), or Non-
Resident Rupee Business Value Account (NRBVA) shall deduct tax from
capital gain arising on the disposal of debt instruments and Government
securities and certificates (including Shariah compliant variant) invested
through aforesaid accounts at the rate specified in Division II of Part III
of the First Schedule.”;

(26) after section 154A, the following new section shall be inserted, namely:
–

“154B. Withholding tax on revenues Received from social media platforms. – (1) Every banking and non-banking financial institution shall, at the time of credit or receipt of any amount in an account of a person, deduct tax at the rate specified in Division IIIAB of Part III of the First Schedule, where such amount represents revenues received from social media platforms.

(2) For the purposes of this section –

(a) “digital content creator” or “social media influencer”

means any individual or entity deriving income from creation, publication, or monetization of content on digital platforms including but not limited to YouTube, Facebook, Instagram, Tik Tok or such others similar platforms; and

(b) “payment” includes any inward remittance, transfer,

or credit received through banking channels,

including through intermediaries such as online

payment service providers or digital financial
platforms.

(3) The tax deducted under this section shall be –

(a) minimum in the case of a resident person; and

(b) final tax in the case of a non-resident person not

having a permanent establishment in Pakistan.

(4) The Board may, by notification in the official Gazette,

prescribe rules for implementation, including identification and reporting

mechanisms.”;

(27) in section 159, after sub-section (1B), the following new sub-section shall

be inserted, namely: —

“(1C) Where a person has distributed ninety percent or more of its
accounting income amongst the unit or certificate holders or
shareholders, as the case may be, in accordance with the provisions of
clause (99) of Part I of the Second Schedule for the last three years, the
person shall be eligible for issuance of exemption certificate under sub-
section (1) and the certificate shall be issued for the subsequent whole
tax year.

(1D) Where a person has been issued approval under the provision of
sub-clause (c) of clause (36) of section 2 of this Ordinance for a tax year,
the person shall be eligible for issuance of exemption certificate under
sub-section (1) and the certificate shall be issued for the said whole tax
year.”;

(28) after section 165A, amended as aforesaid, the following new section

shall be inserted, namely: –

“165AB. Reporting of financial transaction data by banking
companies and financial institutions. — (1) Notwithstanding anything
contained in the Banking Companies Ordinance, 1962 (LVII of 1962),
the State Bank of Pakistan Act, 1956 (XXXIII of 1956), the Protection of
Economic Reforms Act, 1992 (XII of 1992), or any other law for the time
being in force, every banking company and Electronic Money Institutions
(EMIs) shall electronically upload the information, as mentioned in sub-
section (2), to the Central Data Hub, for algorithmic cross-matching of
tax and bank information.

(2) Information in respect of an account holders having
deposits or withdrawals exceeding one hundred million Rupees during a
reporting period in any or all of the bank accounts maintained by the
account holder, specifying particulars of deposits or withdrawals,
including opening and closing balances, peak credits, and total credits
during the reporting period.

(3) This information as shared above shall be digitally processed and shall not be visible to any of the Income Tax Authorities during this cross-matching process.

(4) In case of gross mismatch in the information in respect of an account holder, the digital system of the Board shall feed the information so required into the Compliance Risk Management (CRM) system of the Board and further proceedings shall be conducted by the National faceless centre as provided in this Ordinance.

(6) The Board shall ensure that such information, shared by

the banks, remains strictly confidential and in no case is disclosed or misused in a manner to disregard the confidentiality measures provided in the statutes and rules governing commercial banking, save as provided in this section.

(7) In this section –

(a) “reporting period” means, in respect of a Financial

Year, a period of six months, starting from:

(i) 1st day of July and ending on 31st day of

December; and

(ii) 1st day of January and ending on 30th day of

June,;

(b) “specified date” means the-

(i) 31st day of January in case of reporting

period ending on 31st day of December; and

(ii) 31st day of July in case of reporting period

ending on 30th day of June;

person including current deposits, call deposits,
saving deposits, fix deposits, term deposits, or any
other such deposits by whatever name called;

(d) “peak credits” means the highest credit balance in

all the bank accounts of the account holder on any given date during the reporting period;

(e) “Central Data Hub” means a virtual repository of

data and information maintained by the Board through PRAL; and

(f) “compliance risk management (CRM)” means a

computer programme for identification and communication of compliance risks, including understatement of sales, overstatement of expenses, non-reporting or under-reporting of incomes, assets, and transactions.”;

(29) in section 169, in sub-section (1), in clause (b), after the expression

“154A”, the expression “, clause (b) of sub-section (3) of section 154B,” shall be inserted;

(30) in section 174, for sub-section (5), the following shall be substituted,

namely: –

“(5) The Board may require any person or class of persons to install and use an electronic resource of such type and description as may be prescribed, or to act as an integrated enterprise through a notification in the official Gazette for the purpose of receiving, storing, matching and accessing information regarding any transaction that has a bearing on the tax liability of such person.”;

(31) in section 175AA, in sub-section (1), –

(a) in clause (a), –

(i) after the word “with”, occurring for the first time, the words

“the State Bank of Pakistan and” shall be inserted; and

(ii) after the word “the”, occurring for the fourth time, the

expression “State Bank’s Central Data Repository (by any

name) and” shall be inserted and the word “and” occurring

at the end shall be omitted;

(b) in clause (b), after the word “the”, occurring for the first time, the

words “State Bank of Pakistan, Microfinance banks, and

Electronic Money Institutions (EMIs) and” shall be inserted and for the full stop occuring at the end, the expression “; and” shall be substituted; and

shall be added, namely: –

“(c) the State Bank of Pakistan may establish, operate

and maintain a secure centralized virtual repository
of banking data, comprising such information,
records, and financial transactions of persons
maintained by Scheduled banks on the basis of
unique identifiers, as may be prescribed by the
Board and collect and provide data and results as
per clauses (a) and (b) of this sub-section.”;

(32) in section 177, after sub-section (6A), the following new sub-sections

shall be added, namely, –

“(6B) If, at any stage of the proceedings before him, if the

Commissioner is of the opinion that having regard to, —

(a) the nature and complexity of the accounts; or

(b) volume of the accounts; or

(d) multiplicity of transactions in the accounts; or

(e) specialised nature of business activity of the

taxpayer; and interests of the revenue, is of the
opinion that it is necessary so to do, he may, after
giving the taxpayer a reasonable opportunity of
being heard, and with the previous approval of the
Chief Commissioner, direct the taxpayer to get
either or all of the following to get the —

(i) accounts re-audited by an accountant, and to

furnish a report of such audit duly signed and verified by such accountant including answers to the specific queries as the Commissioner may require;

(ii) inventory re-valued by a cost accountant,

and to furnish a report of such inventory
valuation duly signed and verified by such
cost accountant including answers to the
specific queries as the Commissioner may
require; and

(iii) actuarial values in the accounts determined

by an actuary and to furnish a report of such
valuation duly signed and verified by such
actuary including answers to the specific
queries as the Commissioner may require;

Explanation: The accountant,

the cost accountant, or actuary as referred to
in sub-section (6B) shall be nominated by the
Commissioner for the purposes of this sub-
section from amongst the panel of such

accountants, valuers, or actuaries

nominated by the Board.”;

(33) in section 182, in sub-section (1), in the Table, –

(a) against S. No. 1, in column (3), for the Explanation, the following

shall be substituted, namely: –

“Explanation. — For the purposes of this entry, it is
declared that the expression “tax payable” means the
higher of —

(i) tax chargeable on the taxable income on the

basis of assessment made or treated to have been made under sections 120, 121, 122, 122D, or 122E; or

(ii) the highest tax payable by the person in any

of the three immediately preceding tax years
for which returns of income were duly filed.”;

(b) after S. No. 2, the following new S. Nos. and entries relating

thereto in columns (2), (3) and (4) shall be inserted, namely: —

“2A

Where any person,

having been required

by the Board under

One million rupees for

the first default, and

two million rupees for

174(5)

sub-section (5) of

section 174 to install

and use an electronic

resource of the type

and description

prescribed for the

purpose of storing and

accessing information

regarding any

transaction that has a

bearing on the tax

liability of such

person, fails to install

such electronic

resource within the

time specified, or

having installed it, fails

to use, maintain, or

operate it in the

prescribed manner, or

tampers with,

disables, or

circumvents such

electronic resource.

each subsequent

default.

Where any agency,

authority, institution,

or organisation that is

an integrated

organisation within the

meaning of section

175A, or has been

notified as such by the

Board, fails without

reasonable cause to

—

(a) integrate its IT

platform such data

interface as notified by

the Board within the

time specified; or

(b) share data of the

categories and in the

manner required

under section 175A or

the rules made

thereunder; or

A penalty of five

hundred thousand

rupees for the first

default and one million

rupees for each

subsequent default

shall be imposed on

the principal officer of

the integrated

organisation.

“principal officer” for

this purpose, means

the person who, at the

time of the default or

during the period of

continuing default,

holds overall executive

responsibility for the

administration and

functioning of the

integrated

organisation, by

whatever title or

designation that

person may be referred

175A;

accurate, and timely

data as required; or

(d) designate a focal

person as required; or

(e) remedy a

deficiency or non-

compliance within

thirty days of a written

notice by the Board

identifying the

deficiency.

to under this

ordinance, rules, or

instrument constituting

or governing that

organisation, including

but not limited to the

Governor, Chairman,

Chief Executive

Officer, Director

General, Managing

Director, Secretary, or

Principal Accounting

Officer, as the case

may be; where

executive

responsibility is shared

between two or more

persons by virtue of a

collegiate body or

board structure, the

“principal officer” shall

be the person who,

within that body, holds

specific responsibility

for regulatory

compliance, data

governance, or

information

technology; and the

absence of a formal

designation, or a

vacancy in the office,

shall not relieve the

person actually

exercising the

functions of the

principal officer from

liability under this

section.

(i) in sub-entry (a), in column (3), for the expression “twenty-

five”, the words “one hundred” shall be substituted;

(ii) in sub-entry (b), in column (3), for the word “fifty”, the words

“two hundred ” shall be substituted; and

(iii) in sub-entry (c), in column (3), for the word “one”, the word

“three” shall be substituted;

(d) against S. No. 10, in column (3), for the word “twenty five “, the

words “five hundred” shall be substituted and for the expression “50%”, the expression “100%” shall be substituted;

(e) against S. No. 12, in column (3), for the words “hundred

thousand”, the word “million” shall be substituted;

(f) against S. No. 15, in column (3), for the word “forty”, the

expression “five hundred” shall be substituted and for the full stop occurring at the end a colon shall be substituted and thereafter the following new proviso shall be added, namely:-

“Provided that where the defaulter in such case is a
company, its Principal Officer shall be personally liable to pay an
additional penalty of five hundred thousand rupees for such
offense.”;

(g) against S. No. 35, in column (2), —

(i) for the word ” company”, the expression ” person, including

a company” shall be substituted; and

(ii) after paragraph (c), the following Explanation shall be

inserted, namely: —

“Explanation. — For the purposes of this entry, audited
financial statements furnished in the form of image files,
scanned documents, or password-protected files that are

illegible or otherwise inaccessible to the concerned Inland
Revenue authority shall be deemed to have been
furnished as blank or incomplete documents.”; and

(h) after S. No. 35, amended as aforesaid, the following new S. Nos.

and entries relating thereto in columns (2), (3) and (4) shall be added, namely: —

“36 Where a person

claims a credit in
respect of tax withheld
at source under any
provision of this
Ordinance in excess

of the amount

verifiably deducted
and deposited by the
withholding agent, as
confirmed through the
Board’s computerized
system or otherwise.

Such person shall pay a 168”; penalty equal to the

amount of excess credit claimed

(34) in section 182A, in sub-section (1), in clause (a), in the proviso, –

(a) in paragraph (i), for the word “twenty”, the words “one hundred”

shall be substituted;

(b) in paragraph (ii), for the word “ten”, the word “fifty” shall be

substituted; and

be substituted;

(35) section 209A shall be omitted;

(36) after section 209A, omitted as aforesaid, the following new sections shall

be inserted, namely: –

“209B. Faceless jurisdiction of income-tax authorities. – (1)
Notwithstanding anything contained in this Ordinance, the Inland

Revenue tax authorities appointed in National faceless center shall

perform all or such functions, and exercise all or such powers under this Ordinance as may be assigned to them in respect of such persons, or classes of persons, for such tax years of a person through algorithms developed by the Board.

(2) The jurisdiction so assigned under this Ordinance may be
exclusive or concurrent. In case of concurrent jurisdiction, the powers
and functions not assigned to the National faceless centre shall remain
with the Commissioner having jurisdiction under section 209 of this
Ordinance.

(3) The Board may transfer jurisdictions in respect of persons
or classes of persons, for a specific tax year, for which the jurisdiction
has already been assigned under this section, from National faceless
center to the Commissioner having jurisdiction under section 209 of this
Ordinance, on recommendation of the Chief Commissioner or on its own
accord.

(4) The Chief Commissioner appointed in the National
faceless center may request the Board to direct the Commissioner
having jurisdiction under section 209 or any other Income Tax Authority,
as it may deem fit to conduct physical verification including nature and
size of the business, assets, investments, expenditures, and any other
information or verification required by the Chief Commissioner for
conducting any proceedings assigned to the National faceless centre:

Provided that the Board may exercise its power of
allocation of verification through an algorithm-based system.

(5) Notwithstanding anything contained in any law for the time

being in force, the identity of the authority exercising jurisdiction in the
National faceless centre shall be kept confidential from the taxpayer, the
authorized representative of the taxpayer, and any unauthorized person.

(6) No notice, order, demand, or assessment passed by an
authority appointed at the National faceless centre shall be called in
question or set aside merely on the ground that such authority did not
have jurisdiction over the taxpayer under section 209 of this Ordinance,
or lack of notified delegation of power under section 210 of this
Ordinance, or because of the fact that identity of the authority has been
kept confidential from the taxpayer as per sub-section (5).”;

(37) in section 216, in sub-section (3), –

(a) for clause (ba), the following shall be substituted, namely: –

“(ba) to an auditor, audit mentors and sectoral experts appointed
on contractual basis or engaged through a third party

including a payroll firm in the Federal Board of Revenue,
after a non-disclosure agreement is made with such auditor
as may be prescribed, to assist any authority mentioned in

clauses (b) to (g) of sub-section (1) of section 207;”; and

(b) in clause (ke), for the words “and international”, the expression “,

international research institutions and international” shall be substituted;

(38) in section 222, in sub-section (2), after the word “auditors”, occurring for

the first time, the expression “, audit mentors and sectoral experts” shall be inserted;

(39) for section 227D, the following shall be substituted, namely: –

“227D. National faceless centre.- (1) Notwithstanding anything
to the contrary contained in any of the provisions of this Ordinance, the
Board may, for the purposes of proceedings under this Ordinance in
faceless manner, establish a National faceless center (hereinafter
referred to as “the centre”) and specify its jurisdiction, powers and
functions.

(2) The centre shall comprise a Director General and as many
Chief Commissioners, Commissioners, Additional Commissioners,
Deputy Commissioners, Assistant Commissioners, and any of the
Income Tax Authorities mentioned in section 207 along with support
staff, as the Board may deem fit for the purposes of this section.

(3) The Board may design algorithms for assigning any function or jurisdiction under this section to any of the authorities mentioned in sub-section (2).

(4) The Centre shall comprise as many wings and units as may be prescribed by the Board.

(5) The functions of audit, assessment, and quality control in
a specific case for a specific tax year shall be performed by separate
officers.

(6) All communications, among the units, or with the taxpayer,
or an authorized representative of the taxpayer, or with any other person
with respect to the information or documents or evidence or any other

details, as may be necessary, shall be through electronic means.”;

(40) after section 228, the following new section shall be inserted, namely: –

“228A. Directorate General (Field Compliance), Inland

Revenue. — (1) The Directorate General (Field Compliance) Inland
Revenue shall consist of a Director General and as many Directors,
Additional Directors, Deputy Directors and Assistant Directors and such
other officers as the Board, may by notification in the official Gazette,
appoint.

(2) The Board may, by notification in the official Gazette, —

(a) specify the functions and jurisdiction of the

Directorate General and its officers; and

(b) confer the powers of authorities specified in section

207 upon the Directorate General and its officers.”;

(41) in section 231B, in sub-section (6), —

(i) in clause (b), after the semi colon, occurring at the end, the word

“and” shall be added, and

(ii) clause (c) shall be omitted;

(42) section 236CA shall be omitted;

(43) after section 237B, the following new section shall be inserted, namely

“237C. Uniform. – The Board may by notification in the official Gazette, prescribe rules for wearing of uniform by officers and staff of Inland Revenue Service of Pakistan.”;

(44) in the First Schedule, —

(a) in Part I, —

(i) in Division I, in clause (2), for the Table, the following shall

be substituted, namely: —

“TABLE

S. No.	Taxable Income	Rate of Tax
(1)	(2)	(3)
1.	Where taxable income does not exceed Rs. 600,000/-	0%
2.	Where taxable income exceeds Rs. 600,000/- but does not exceed Rs. 1,200,000	1% of the amount exceeding Rs. 600,000/-
3.	Where taxable income exceeds Rs. 1,200,000/- but does not exceed Rs. 2,200,000	Rs. 6,000 + 11% of the amount exceeding Rs. 1,200,000/-
4.	Where taxable income exceeds Rs. 2,200,000/- but does not exceed Rs. 3,200,000	Rs. 116,000 + 20% of the amount exceeding Rs. 2,200,000/-
5.	Where taxable income exceeds Rs. 3,200,000/- but does not exceed Rs. 4,100,000	316,000 + 25% of the amount exceeding Rs. 3,200,000/-
6.	Where taxable income exceeds Rs. 4,100,000/-	Rs. 541,000 + 29% of the amount exceeding Rs. 4,100,000/-

but does not exceed Rs.

5,600,000

Where taxable income

exceeds Rs. 5,600,000/-

but does not exceed Rs.

7,000,000

Rs. 976,000 + 32% of

the amount exceeding

Rs. 5,600,000/-

Where taxable income

exceeds Rs. 7,000,000/-

Rs. 1,424,000 + 35% of

the amount exceeding

Rs. 7,000,000/-:”;

(ii) in Division IIB, for the Table, the following shall be

substituted, namely: —

“TABLE

No.

Income under section

4C and person

Rate of Tax

Income of a banking

company exceeding Rs.

150 million

10% of the income

Income of a person,

whose income is

computed as per Part I of

the Fifth Schedule,

exceeding Rs. 150

million, so far as it does

not exceed the limit

10% of the income

specified in rule 4 of that

Part

Income of a person,

engaged in deriving

income from sale of any

kind of fertilizer,

exceeding Rs. 150

million.

10% of the income

Income of a person other

than those mentioned in

S. No. 1, 2 and 3,

exceeding Rs. 500

million

8% of the income

(iii) in Division IVA, for the word “delivered”, the word “ordered”

shall be substituted;

(iv) in Division VII, in the third Proviso, after the word “shall”,

the words “charge and” shall be inserted;

(v) Division VIIIC shall be omitted; and

(vi) in Division IX, in the Table, in column (1), against S. No. 3

in column (2), entry (a) shall be omitted;

(b) in Part III, —

(i) after omitted Division IB, the following new Division shall

be inserted, namely:—

“Division IC

Certain payments by life insurance companies and

takaful operators

S. No.	Description	Rate of Tax
(1)	(2)	(3)
1	Where payout or benefit is made within one year from the date of issuance of the life insurance policy, family takaful certificate or plan	15%
2	Where payout or benefit is made after one year but before completion of seven years from the date of issuance of the life insurance policy, family takaful certificate or plan.	10%”;

(ii) in Division III, —

(A) in paragraph (2), —

(1) in sub-paragraph (i), for the expression “6%”,

the expression “7%” shall be substituted;

(2) for sub-paragraph (ii), the following new sub-

paragraph shall be substituted; namely: —
“(ii) 15% in the case of independent
professional services such as doctors,

lawyers, architects, accountants,

software engineers or developers,

working independently;”; and

(3) after sub-paragraph (ii), substituted as

aforesaid, the following new sub-paragraphs shall be added, namely: —

“(iii) 1.5% of the gross amount payable to

electronic and print media in case of advertising services; and

(iv) 14% of the gross amount in the case

of services other than those covered
in sub-paragraphs (i), (ii) and (iii).”;

(iii) in Division IIIAA, for the expression “15%”, the expression

“20%” shall be substituted;

(iv) after Division IIIAA, the following new Division shall be

inserted, namely: —

“Division IIIAB

Withholding Tax on Revenues Received from Social Media Platforms

The rate of tax to be deducted under section 151B shall –

(a) 5% in case of resident persons whose name

appearing in the Active Taxpayers’ List; and

(b) 5% in case of non-resident person:

Provided that tax collected under clause (b) shall be final tax.”;

(v) in Division IV, —

(A) in paragraph (1), for the expression “1%”, the

expression “1.25%” shall be substituted; and

(B) in paragraph (3), for the expression “1%”, the

expression “1.25%” shall be substituted.; and

(vi) in Division IVA, in the Table, in column (1), in S. No. (1), in

the entry in column (3), for the figure “2026”, the figure

“2029” shall be substituted; and

(b) in Part IV, —

(i) for Division X, the following shall be substituted, namely:

—

“Division X

Advance tax on sale or transfer of immovable
property

The rate of tax to be collected under section 236C shall be 2.75% of the gross amount of the consideration received.”;

(ii) for Division XVIII, the following shall be substituted,

namely: —

“Division XVIII

Advance tax on purchase of immovable
property

The rate of tax to be collected under section 236K
shall be 1.25% of the fair market value of the immovable
property.”;

(iii) in Division XXVII, for the expression “5%”, the expression

“0.5%” shall be substituted; and

(iv) Division XA shall be omitted;

(52) in the Second Schedule, —

(a) in Part I, —

(i) in clause (57), in sub-clause (4), in the Table, in

column (1), —

(A) against Sr. No. (xiii), in column (2), for the

expression “National Endowment Scholarship for

Talent (NEST)”, the words “Pakistan Education

Endowment Fund” shall be substituted; and

(B) after Sr. No. (lii), the following new Sr. Nos. and

entries relating thereto in column (2), shall be

added, namely: —

“liii	Pakistan Red Crescent Society
liv	Shaheen Foundation established by Pakistan Air Force
lv	Dawat-e-Hadiya
lvi	Bahria Foundation established by Pakistan Navy
lvii	Sindh Institute of Urology and Transplantation.”;

(ii) in clause (78), for the words “Foreign Currency Account

Scheme”, the expression “any foreign currency account scheme(s)” shall be substituted; and

(iii) in clause (79), for the expression “non-resident individual

holding a Pakistan Origin Card (POC) or National ID Card
for Overseas Pakistanis (NICOP) or Computerized
National ID Card (CNIC)”, the expression “a person
maintaining a Non-Resident Pakistani Rupee Value
Account “NRVA” or Non-Resident Business Value Account
“NRBVA” under the scheme introduced by the State Bank
of Pakistan” shall be substituted;

(b) in Part II, —

(i) in clause (5AA), for the word “individual”, the word “person”

shall be substituted and for the expression “or a foreign currency account”, the expression “Foreign Currency Value Account (FCVA), Foreign Currency Business Value Account (FCBVA), Non-Resident Rupee Value Account (NRVA), or Non-Resident Rupee Business Value Account (NRBVA)” shall be substituted;

(ii) after clause (24CB), the following new clause shall be

inserted, namely: —

“(24CC) The rate of tax under clause (b) of sub-

section (1) of section 153 to be deducted
from a person rendering terminal or port

service shall be twelve percent of the gross

amount of payment.”; and

(iii) for clause (24D), the following shall be substituted, namely:
—

“(24D) The rate of minimum tax under sub-section

(1) of section 113 in the case of distributors,
dealers, sub-dealers, wholesalers of

packaged food, fertilizer, locally

manufactured mobile phones, sugar and
electronics shall be 0.5%, subject to the
conditions that beneficiaries of reduced rate
are appearing on the active taxpayers’ lists
issued under the provisions of the Sales Tax
Act, 1990 and the Income Tax Ordinance,
2001 (XLIX of 2001).”;

(i) in clause (12A), for the word “to”, occurring for the second

time, the word “by” shall be substituted;

(ii) in clause (47B), after the expression “151,”, the expression

“151A,” shall be inserted;

(iii) clause (46A) shall be omitted;

(iv) clause (57) shall be omitted;

(v) in clause (111AB), for the expression “non-resident

individual holding Pakistan Origin Card (POC) or National
ID Card for Overseas Pakistanis (NICOP) or Computerized

National ID Card (CNIC) maintaining a Foreign Currency

Value Account (FCVA) or Non-resident Pakistani Rupee Value Account (NRVA)”, the expression “Foreign Currency Value Account (FCVA), Foreign Currency Business Value Account (FCBVA), Non-Resident Rupee Value Account (NRVA), or Non-Resident Rupee Business Value Account (NRBVA)” shall be substituted;

(vi) for clause (114A), the following shall be substituted,

namely :-

“(114A) The provisions of clause (ae) of sub-section

(1) of section 114 and section 181 shall not apply
to a person maintaining a Foreign Currency Value
Account (FCVA), Foreign Currency Business
Value Account (FCBVA), Non-Resident Rupee
Value Account (NRVA), or Non-Resident Rupee
Business Value Account (NRBVA) with authorized
banks in Pakistan under the foreign exchange
regulations issued by the State Bank of Pakistan:

Provided that this clause shall not apply if the
person referred in this clause has Pakistan-source
taxable income other than the following; namely:—

(a) profit on debt on FCVA, FCBVA, NRVA, or

NRBVA ;

(b) profit on debt earned on Government of

Pakistan (GOP) securities either

conventional or Shariah Compliant where

investment has been made from proceeds of FCVA, FCBVA, NRVA, or NRBVA;

property acquired from proceeds of FCVA or
NRVA;

(d) capital gain on disposal of securities traded

on Pakistan Stock Exchange and units of
mutual funds that are acquired from
proceeds of FCVA, FCBVA, NRVA, or
NRBVA; or

(e) dividend income from securities traded on

Pakistan Stock Exchange and mutual funds that are acquired from proceeds of FCVA, FCBVA, NRVA, or NRBVA.”; and

(vii) in clause (115), for the word “one”, the word “two” shall be

substituted;

(53) in the Eighth Schedule, rule 5 shall be omitted; and

(54) in the Tenth Schedule, —

(a) rule 1A shall be omitted; and

(b) in rule 10, clause (y) shall be omitted;

Amendments in the Federal Excise Act, 2005.— In the Federal Excise Act,

2005, the following further amendments shall be made, namely: –

(1) in section 2,-

(a) after clause (2), the following new clause shall be inserted,

namely:-

“(2A)“algorithmic settlement mechanism” means algorithmic
settlement mechanism provided under section 26AAA of

the Sales Tax Act, 1990;”;

(b) after clause (9a), the following new clause shall be inserted,

namely:-

“(9b) “electronic invoicing system” means such electronic
system or mechanism as may be prescribed or

approved by the Board for issuance and recording of sales tax invoices in electronic form;”;

namely:-

“(16A1) “National faceless centre” means the National faceless

centre as defined in section 32C of the Sales Tax Act, 1990 (VII of 1990); and

(d) after clause (19a), the following new clause shall be inserted,

namely:-

“(19b) “production monitoring system” means any system or
technology, used for the purposes of monitoring production

and sale of goods, whether in real-time or otherwise, including such systems or technologies as may be prescribed by the Board from time to time;”;

(2) in section 3, after sub-section (3A), the following new sub-section shall

be inserted, namely:-

“(3B) Notwithstanding anything contained in this section, there shall be

levied and collected a Special Excise Duty in addition to duty imposed under sub-section (1), on such goods as listed in Table-IA of the First Schedule to this Act at the rates specified therein:

Provided that the Board may prescribe time, mechanism, procedure, mode and manner of collection for such duty.”;

(3) after section 7, the following new section shall be inserted, namely:-

“(7A) National faceless centre and application of the provisions of
the Sales Tax Act, 1990.- (1) Notwithstanding anything contained in this
Act, the audit and assessment proceedings under the Act may be
conducted in the faceless manner by the National faceless centre.

(2) The provisions of the Sales Tax Act, 1990 (VII of 1990) relating to the establishment, assignment of jurisdiction, conduct of audit, assessment and appeals shall apply mutatis mutandis.

(3) Notwithstanding anything contained in this Act, the Board may
establish digitally operated algorithmic settlement mechanism for
settlement of proceedings at any stage before any order under this Act
is passed and the provisions relating to algorithmic settlement
mechanism of the Sales Tax Act, 1990 (VII of 1990) shall apply mutatis
mutandis.

(4) in section 18, for sub-section (1), the following shall be substituted,

namely:-

“(1) A person registered under this Act shall issue for each transaction
an invoice including an advance receipt invoice, bearing a verifiable and
unique FBR invoice number at the time of clearance or sale of goods

including goods chargeable to duty at the rate of zero per cent or

providing or rendering services containing the following particulars in Urdu or English language, namely:—

(a) name, address and registration number of the seller;

(b) name, address and registration number of the buyer;

(d) description and quantity of goods or as the case may be,

description of services;

(e) value exclusive of excise duty;

(f) amount of excise duty; and

(g) value inclusive of excise duty:

Provided that the Board may notify any person or class of persons who may be allowed to issue an advance receipt invoice under the notified system:

Provided further that the condition of verifiable and unique
FBR invoice number shall be applicable from a time as notified by
the Board.”;

(5) in section 19,-

(a) in clause (a), in sub-section (2), for the words “Federal Excise

officer”, the words “Officer of Inland Revenue” shall be

substituted; and

(b) for sub-section (4), the following shall be substituted, namely:-

“(4) Any person who, without the approval of the

Commissioner, directly or otherwise destroys, damages, erases
or otherwise manipulates data stored in or used in connection with

a computer, equipment or system used for the electronic

monitoring of production, manufacture, sales, clearance, stocks
or any other related activity implemented under this Act and the
rules made thereunder, including any production monitoring
system, video analytics system or otherwise uses a computer,
the purpose or effect of which is to reduce, avoid or evade any
liability to duty of excise which would otherwise have been
imposed by this Act, or to defeat any provisions of this Act and
rules made there under shall be guilty of an offence and shall be
liable to fine which may extend to seventy five thousand rupees
or ten times of the duty involved whichever is higher and
punishment with imprisonment which may extend to five years or
both.”;

(6) in section 26, for sub-section (1), the following shall be substituted,

namely:-

“(1) The counterfeited cigarettes or beverages which have
been manufactured or produced unlawfully and other dutiable
goods on which duty of excise has not been paid in the manner
as required under this Act and the rules made thereunder or such
goods without affixing or affixing counterfeit tax stamps, bar
codes, banderols, stickers, labels or bar codes, as required under
section 45A of this Act, or goods which are required to be
monitored through a production monitoring system under this Act
and the rules made thereunder but are manufactured, produced,
transported, removed or otherwise dealt with without such

monitoring in the prescribed manner, shall be liable to seizure

along with the conveyance, which has been used for the movement, carriage or transportation of such goods.”;

(7) in section 27, for sub-section (1), the following shall be substituted,

namely:-

“(1) The cigarettes or beverages seized for the reasons of
counterfeiting or such goods without affixing or affixing
counterfeited tax stamps, banderoles, stickers, labels or
barcodes, as required under section 45A of this Act ,or goods
which are required to be monitored through a production
monitoring system under this Act and the rules made thereunder
but are manufactured, produced, transported, removed or
otherwise dealt with without such monitoring in the prescribed
manner, shall be liable to outright confiscation and shall be
destroyed in the manner prescribed in sub-section (10) of section

19.”;

(8) in section 33, in sub-section (1), for the words “Federal Excise officer”,

the words “officer of Inland Revenue” shall be substituted;

(9) after section 34A the following new section shall be inserted, namely: –

“34AA. Independent case scrutiny committee. – (1) A

reference under section 34A of the Act before the High Court, or
an appeal or review before the Federal Constitutional Court or the
Supreme Court of Pakistan shall only be filed by the
Commissioner Inland Revenue after the same has been

approved by an independent case scrutiny committee as

constituted by the Board.

(2) The Board may constitute one or more such committees and assigned them cases or classes of cases decided by the Appellate Tribunal Inland Revenue or the High Court, as the case may be.

(3) The Committee shall comprise of the following Members as nominated by the Board –

(a) a retired judge of the Supreme Court of Pakistan,

the Federal Constitutional Court, or any of High
Court who shall also act as Chairman of the
Committee;

(b) an Advocate having not less than fifteen years of

experience in duty and commercial litigation before
the High Court or Supreme Court of Pakistan, to be
nominated from a panel notified by the Board from
time to time; and

or above).

(4) The powers, functions, and procedure of the Committee
along with remuneration of its Members shall be governed as may be
prescribed.

(5) Recommendations of the committee shall be binding upon
the Commissioner Inland Revenue having jurisdiction over the case.

(6) Notwithstanding anything contained in any other law for
the time being in force, no suit, prosecution, or other legal proceedings

shall lie against the Members of the committee and the Commissioner

Inland Revenue having jurisdiction over the case, in relation to the decisions made under this section.

(7) The committee constituted under this sub-section shall exercise its powers and functions with effect from the date of its constitution as notified by the Board.”;

(10) in section 43A, for the words “federal excise”, the words “of Inland

Revenue” shall be substituted;

(11) in section 44, in sub-section (3), for the words “Federal Excise Officer”,

the words “Officer of Inland Revenue” shall be substituted;

(12) for section 45A, the following shall be substituted, namely:-

“(45A) Monitoring or tracking by electronic or other means.-

(1) Subject to such conditions, restriction and procedures as it may deem
fit to impose or specify, the Board may, by notification in the official
Gazette, specify any registered person or class of registered persons or
any goods or services or class of goods or services in respect of which
monitoring or tracking of production, sales, clearance, stocks or any
other related activity may be implemented through electronic or other
means as may be prescribed.

(2) From such date as may be prescribed by the Board, no
excisable goods shall be removed or sold by the manufacturer or any
other person without affixing tax stamp, band role stickers, labels, bar
code production monitoring system, video analytics, etc, in any such
form, style and manner as may be prescribed by the Board in this behalf.

(3) Such tax stamps, banderols, stickers, labels, barcodes,

production monitoring equipment etc., shall be acquired by the registered person referred to in sub-section (2) from a licensee appointed by the Board.”;

(13) in section 46,-

(a) for sub-sections (1), (2) and (2A), the following shall be

substituted, namely:-

“(1) The officer of Inland Revenue authorized by the Board or the Commissioner may, after giving advance notice in writing, conduct audit of the records and documents of any person registered under this Act.

(2) In case the Commissioner has information or sufficient
evidence showing that such registered person is involved in fraud
or evasion of duty, he may authorize an officer of Inland Revenue
not below the rank of Assistant Commissioner, to conduct audit at
any time in a year.

(2A) After completion of the audit under this section of any other provisions of this Act, the officer of Inland Revenue shall, after obtaining the registered person’s explanation on all the issues raised in the audit, issue an audit report containing audit observations and finding.

(2B) For the purpose of sub-section (2), the Commissioner may conduct audit proceedings electronically through video links, or any other facility as prescribed by the Board.”;

(2C) After issuing the audit report under this section or any other

provision of law, the officer of Inland Revenue may, if required pass an order under sub-section (2) of section 14, after providing an opportunity of being heard to the registered person under sub section (1) of section 14, imposing the amount of duty as per law, charging default surcharge, imposing penalty and recovery of any amount erroneously refunded.”;

(b) in sub-section (3), for the proviso, the following shall be

substituted, namely:-

“Provided that if a registered person deposits the amount
of duty not paid, short paid or amount of duty evaded along with
default surcharge during or after the audit but before the, issuance
of show cause notice under sub-section (1) of section 14, he may
deposit such amount along with twenty five percent of the amount
of penalty prescribed under this Act or the rules made there
under:

Provided further that if a registered person deposits the amount of duty not paid, short paid or amount of duty evaded along with default surcharge, after issuance of show cause notice under sub-section (1) of section 14, he may deposit such amount along with fifty percent of the amount of penalty prescribed under this Act or the rules made there under and in such case, further proceedings in the case shall abate.”;

sub-section shall be inserted, namely:-

100

“(3A) If, at any stage of the proceedings before him, if the

Commissioner is of the opinion that having regard to, —

(a) the nature and complexity of the accounts; or

(b) volume of the accounts; or

(d) multiplicity of transactions in the accounts; or

(e) specialized nature of business activity of the

registered person, and interests of the revenue, is
of the opinion that it is necessary so to do, he may,
after giving the registered person a reasonable
opportunity of being heard, and with the previous
approval of the Chief Commissioner, direct the
registered person to get either any or all of the
following to get the –

(i) accounts re-audited by an accountant, and to

furnish a report of such audit duly signed and verified by such accountant including answers to the specific queries as the Commissioner may require; and

(ii) inventory re-valued by a cost accountant,

and to furnish a report of such inventory
valuation duly signed and verified by such
cost accountant including answers to the
specific queries as the Officer of Inland
Revenue may require;

101

Explanation.- The accountant or the cost

(14) in the First Schedule,-

(1) in Table-1, in column (1),-

(a) against S. No. 7a, in column (4), for the words “forty four”,

the word “ten” shall be substituted;

(b) against S. No. 8a, in column (4), for existing entries, the

following shall be substituted, namely:-

“Rupees sixteen thousand five hundred per kg”

expression “2026”, the expression “2027” shall be

substituted;

(d) after S. No. 55, the following new S. No. and entries

relating thereto in columns (2), (3) and (4) shall be inserted,
namely:-

102

“55A

Electric cars, electric

SUVs, and electric

pickup vehicles,

imported for personal

use in CBU condition,

of import value

including Custom

Duty:-

(a) Not exceeding

PKR 20 million

(b) exceeding

PKR 20 million and

upto PKR 30 million

PKR 30 million

Respective

Heading

30%

40%”

(e) against S. No. 59, in column (2), for the words “excluding

mineral and aerated waters”, the expression “excluding
mineral waters, aerated waters, hydration drinks or
electrolyte beverages specifically formulated to support
hydration, electrolytes replenishment not containing sugar
exceeding 5g/100 ml or artificial sweetener” shall be
substituted;

(f) for entry 63, and entries relating thereto in columns (2), (3)

and (4), following shall be substituted, namely: —

103

“63

Lubricating oil and base

lubricating oils

2710.1951

2710.1952

2710.1953

2710.1993

Five percent

ad valorem.”;

(g) after S. No. 64 and entries relating thereto in columns (2),

(3) and (4), the following new S. No. and entries relating thereto shall be added, namely:-

“65

(i) Petroleum top

Naphtha

2710.1942

(i) Rs. 80

per liter

(ii) White

Spirit/Mineral

Turpentine Oil

(MTT)

2710.1240

(ii) Rs. 80

per liter

(iii) Solvent Oil

2710.1250

(iii) Rs. 80

per liter.”;

(h) in Table-1, for Restriction-2, the following shall be

substituted, namely:-

“(2) Restriction-2 – Brand variants at different price points.- No manufacturer or importer of cigarette can introduce or sell a new variant of the existing brand at a price lower than the lowest actual price of the existing brand. For the purposes of this restriction, current minimum price of existing brand means the lowest price of an existing brand on the day of announcement of Budget of the current financial year.

104

Explanation.- For the purpose of this restriction, brand variant

means any cigarette brand with identical name, trademark, design, pattern or any unique distinguishing mark associated with an existing brand.”;

(2) after Table-1 amended as aforesaid, the following new Table shall be inserted, namely:-

“Table IA

No.

Description of

goods

Heading/sub-

heading

Number

Rate of duty

(1)

(2)

(3)

(4)

Imported motor

cars, SUVs and

other motor

vehicles, excluding

auto rickshaws,

principally

designed for the

transport of

persons (other

than those of

headings 87.02),

and till the 30th day

of June, 2027

electric vehicles (4

87.03

8704.2190

8704.3190

105

wheelers)

including station

wagons, double

cabin (4×4) pickup

vehicles and racing

cars:

(a) of cylinder

capacity exceeding

2000cc but not

exceeding 3000cc

(b) of cylinder

capacity exceeding

3000cc

40% ad val

41% ad val.”;

(3) in Table-II, in column (1), against S. No. 3, in column (2), for sub-

clause (ii) of clause (b) and entries relating thereto in column (4), the following shall be substituted, namely: –

“(ii) Club, business and first class

air tickets issued on or after the

1st day of July, 2026:

(a) IATA Traffic Conference Area

1 (North, Central, South America

and Environs)

(b) IATA Traffic Conference Area

(I) Middle East and Africa

(a) Fifty thousand rupees

(b)(I) Twenty-five thousand

rupees

106

(II) Europe

3 (Far East, Australia, New

Zealand and Pacific Islands)

(b)(II) Forty thousand rupees

(15) in the Second Schedule, after the omitted S. No. 4, in column (1) and

entries relating thereto in columns (2) and (3), the following new S. No.

shall be inserted, namely:-

“5.	Imported and locally produced:
	(i) Petroleum top Naphtha	2710.1942
	(ii) White Spirit/Mineral Turpentine Oil (MTT)	2710.1240
	(iii) Solvent Oil	2710.1250”; and

(16) in the Third Schedule, in Table-I, after S. No. 27, in column (1) and

entries relating thereto in columns (2) and (3), the following new S. No.

shall be inserted, namely:-

“28.

Import of bullet proof vehicles by

the:

i) Federal Government for logistic

arrangements for Shanghai

Cooperation Organization (SCO)

summit subject to the prior

approval from the Ministry of

Foreign Affairs and the Ministry of

Interior and Narcotics Control

Respective

heading.”.

107

ii) By the Federal Government or

Provincial Government for threat

of terrorism against a public

functionary as determined by the

Ministry of Interior and Narcotics

Control, subject to approval by

the Federal Government”.

Amendments of the Finance Act, 2022 (XIII of 2022). — In the Finance Act, 2022 (XIII of 2022), in section 8, —

(1) in sub-section (2), —

(a) in clause (ab), the word “and” at the end shall be omitted;

(b) in clause (ac), after the semicolon occurring at the end, the word

“and” shall be added; and

(2) in sub-section (3), —

(a) in clause (b), in the proviso, after the semicolon occurring at the

end, the word “and” shall be added; and

(b) clause (c) shall be omitted;

(3) in sub-section (4), in clause (g), for the expression “(ab), (ac) and (b)”,

the expression, “(ab) and (ac) shall be substituted;

(4) in sub-section (13), clause (c) shall be omitted; and

(5) in the First Schedule, in the Table, in column (1), S. No. (4) and entries

relating thereto in columns (2) and (3) shall be omitted.

108

STATEMENT OF OBJECTS AND REASONS

The purpose of this bill is to make financial provisions for the year beginning on
the first day of July, 2026 and it shall come into force on the first day of July, 2026

(Senator Muhammad Aurangzeb)

Minister for Finance & Revenue

109

STATEMENT OF ESTIMATED TAX EXPENDITURE

Section 8 of Public Finance Management Act, 2019 provides that The
Federal Government shall, in respect of every financial year cause to be laid down
before the National Assembly, Finance Bill consistent with Article 73 of the Constitution
including a statement of estimated tax expenditure of the Federal Government.

A Tax Expenditure Report 2026 providing the details of tax expenditure

in FY 2024-25, which involves tax expenditure in Sales Tax of Rs. 1,273.98 Billion, a tax expenditure in respect of Customs Duty of Rs. 499.14 Billion and tax expenditure in respect of Income Tax of Rs. 579.70 Billion, arriving at a total estimated tax expenditure of Rs. 2,352.81 Billion is being laid before the Parliament.

110

NOTES ON CLAUSES

CUSTOMS ACT, 1969 (IV OF 1969)

Clause 4(1) Seeks to add a new clause 2 (ssssa) to define State Warehouse

for legal clarity.

Clause 4(2) Seeks to amend sub-section 5 of section 19 to give continuity to

the notifications issued under section 19 during the Financial year.

Clause 4(3)(a) Seeks to amend sub-section (3) of section 32 to remove a legal

lacuna whereby no mis-declaration case can be framed in multiple declarations up to twenty thousand.

Clause 4(3)(b) Seeks to amend sub-section (3A) of section 32 to remove a legal

lacuna whereby no mis-declaration case can be framed in multiple declarations up to one hundred thousand.

Clause 4(4) Seeks to amend section 80 to provide legal cover to non-intrusive

examination i.e. scanning.

Clause 4(5)(a) Seeks to amend section 82 to streamline the imposition of penalty

on late filing of GD and late removal of goods from ports after clearance.

Clause 4(5)(b) Seeks to add proviso to section 82 to provide legal cover to

outsource customs auctions.

Clause 4(6)(a) Seeks to amend S.No.7A to section 156(1) to enhance the

quantum of penalty on Terminal Operators from five hundred thousand rupees to ten million rupees for not entertaining delay and detention certificate issued by Customs.

Clause 4(6)(b) Seeks to add a new S.No.62A in section 156(1) to penalize illegal

removal of goods from state warehouses.

110

Clause 4(6)(c) Seeks to amend the S.No.83 of Section 156(1) to include any

officer of an authority bound to deposit the impugned goods under section 170 to customs.

Clause 4(7) Seeks to amend section 157(2) to add Explanation of the word

“removal” that it includes all types of illegal movement of smuggled
goods.

Clause 4(8) Seeks to amend section 170 to require any authority to hand over

the goods liable for confiscation to Customs, without waiting for conclusion of the proceedings of case.

Clause 4(9) Seeks to insert new sub-section (6) to section 179 to introduce

Faceless Adjudication and virtual proceedings to enhance transparency, efficiency and quick disposal of cases.

Clause 4(10) Seeks to add a new sub-section (6) to section 185A for

empowering Special Judge to freeze the property of accused during trial if it is believed that the accused is involved in illegal transfer of money into or out of Pakistan.

Clause 4(11) Seeks to add a new section 196JJ to provide legal cover to

independent case scrutiny committee for filing or otherwise of

appeal before the Courts.

Clause 4(12) Seeks to amend section 215 to provide legal cover to also publish

legal Notices/Orders in newspapers where respondent is not

traceable

Clause 4(13) Seeks to amend the First Schedule to the Customs Act, 1969

Clause 4(14) Seeks to substitute the Fifth Schedule to the Customs Act, 1969

111

SALES TAX ACT, 1990

Clause 5(1)(a) Seeks to insert new clauses (1AA) and (1AAA) after clause (1A)

of section 2

Clause 5(1)(b) Seeks to insert new clause (9AB) after omitted clause (9AA) of

section 2

Clause 5(1)(c) Seeks to insert new clause (17A) after clause (17) of section 2

Clause 5(1)(d) Seeks to insert new clause (22)(1A) after clause (22) of section 2

Clause 5(1)(e)(i) Seeks to insert the expression “having turnover more than two

hundred million” after the expression, “wholesaler-cum-retailer” in

sub-clause (d) in clause (43A) of section 2

Clause 5(1)(e)(ii) Seeks to omit sub-clauses (f) and (g) of clause (43A) of section 2

Clause 5(1)(e)(iii) Seeks to insert new sub-clause (gb) after omitted sub-clause (ga)

of clause (43A) of section 2

Clause 5(1)(e)(iv) Seeks to substitute a colon, for full stop and thereafter to add new

proviso in sub-clause (h) of clause (43A) of section 2

Clause 5(1)(f) Seeks to add Explanation after sub-clause (a) of clause (44) of

section 2

Clause 5(1)(g) Seeks to substitute the full stop, for the colon and thereafter to

add the following expression in sub-clause (j) of clause (46) of section 2:

Clause 5(2) Seeks to substitute a colon, for the full stop at the end and

thereafter to add new proviso, after the first proviso in sub-section

(2) of section 6

112

Clause 5(3) Seeks to substitute a colon, for the full stop at the end and

thereafter to add new proviso, in second proviso in sub-section

(1) of section 8B

Clause 5(4) Seeks to substitute a colon, for the full stop at the end and

thereafter to add new proviso in section 9

Clause 5(5) Seeks to inert new section11H after section 11G

Clause 5(6) Seeks to insert the expression, “, has committed non-compliance

of sub-section (5) and sub-section (6) of section 23 or section
40C” after the words “invoices” in sub-section (2) of section 21

Clause 5(7)(i) Seeks to substitute the expression “as well as exempt supply shall

issue a tax invoice including an advance receipt invoice, bearing
a verifiable and unique FBR invoice number” for the words “supply
shall issue a serially numbered tax invoice” in sub-section (1) of
section 23

Clause 5(7)(ii) Seeks to substitute for the existing provisos, after the Explanation

in clause (b) of sub-section (1) of section 23

Clause 5(8)(i) Seeks to insert new sub-sections (8A) and (8B) after sub-section

(8) of section 25

Clause 5(8)(ii) Seeks to substitute the words “issuing the audit report” for the

words “completion of the audit” in sub-section (9) of section 25

Clause 5(8)(iii)(a) Seeks to substitute the word “deposits” for the words “wishes to

deposit” in sub-section (11) of section 25

Clause 5(8)(iii)(b) Seeks to substitute the words “fifty percent” for the words “full

amount” in the second proviso in sub-section (11) of section 25

Clause 5(9) Seeks to insert new 30AA after section 30A

113

Clause 5(10) Seeks to insert new section 30DDDB after section 30DDDA

Clause 5(11) Seeks to insert new section 32C after section 32B

Clause 5(12)(a)(i) Seeks to substitute the expression “fifty” for the expression “ten”

in column (2) against S. No. 1 of section 33

Clause 5(12)(a)(ii) Seeks to substitute the expression “thousand” for the expression

“hundred” in the proviso in column (2) against S. No. 1 of section
33

Clause 5(12)(b) Seeks to substitute the expression “twenty-five thousand rupees

or five per cent” for the expression “five thousand rupees or three per cent” in column (2) against S. No. 2 of section 33

Clause 5(12)(c)(i) Seeks to substitute the expression “fifty” for the expression “ten”

in column (2) against S. No. 3 of section 33

Clause 5(12)(c)(ii) Seeks to substitute the expression “ten” for the expression “five”

in column (2) against S. No. 3 of section 33

Clause 5(12)(d)(i) Seeks to substitute the expression “fifty thousand rupees or five

per cent of the amount of the tax involved, whichever is higher” for the expression “ten thousand rupees or five per cent of the amount of the tax involved, whichever is higher” appearing for the first time in column (2) against S. No. 5 of section 33

Clause 5(12)(d)(ii) Seeks to substitute the expression “thousand” for the expression

“hundred” in the first proviso, in column (2) against S. No. 5 of section 33

Clause 5(12)(e) Seeks to substitute the expression “fifty” for the expression “ten”

in column (2) against S. No. 7 of section 33

114

Clause 5(12)(f)

Clause 5(12)(g)

Clause 5(12)(h)

Clause 5(13)(a)

Clause 5(13)(b)

Clause 5(14)

Clause 5(15)

Clause 5(16)(a) & (b)

Clause 5(17)

Clause 5(18)

Clause 5(19)(a)(i)

Clause 5(19)(a)(ii)

Clause 5(19)(a)(iii)

Clause 5(19)(a)(iv)

Seeks to substitute the expression “fifty” for the expression “ten” in column (2) against S. No. 8 of section 33

Seeks to substitute S. No. 25 of section 33

Seeks to add S. Nos. 29, 30 and 31 and entries relating thereto in columns (1), (2) and (3) after S. No. 28 of section 33

Seeks to substitute sub-sections (2) and (3) of section 40C

Seeks to add new sub-section (6) after the omitted sub-section

(5) of section 40C

Seeks to insert new section 40F after section 40E

Seeks to insert new section 45C after section 45B

Seeks to insert new sections 47AA and 47AAA after section 47A

Seeks to add new sub-section (3) after sub-section (2) of section
56B

Seeks to add new S. Nos. 56 to 76 and entries relating thereto in
columns (2) and (3) after S. No. 55 in the Table of Third Schedule

Seeks to substitute S. No. 32 and entries relating thereto in columns (2) and (3) in Table-1 of the Sixth Schedule

Seeks to substitute expression “2027” for the expression “2026” in column (2) against S.No. 157 of Table-1 of Sixth Schedule

Seeks to substitute S. No. 181 and entries relating thereto in columns (2) and (3) of Table-1 of the Sixth Schedule

Seeks to add new S. Nos. 182, 183, 184 and 185 and entries relating thereto in columns (2) and (3) after S. No. 181 of Table-1 of the Sixth Schedule

115

Clause 5(19)(b) Seeks to add new S. Nos. 23 ad 24 and entries relating thereto in

columns (2), (3) and (4) after S. No. 22 in Table-3 of the Sixth
Schedule

Clause 5(20)(a) Seeks to substitute expression “30th June, 2027” for the

expression “30th June, 2026” in column (2) against S. No. 71 of Table-1 of Eighth Schedule

Clause 5(20)(b) Seeks to substitute S. No. 80 and corresponding entries relating

thereto in columns (2), (3) and (4) of Table-1 of Eighth Schedule

Clause 5(21)(a) Seeks to add a comma after the word “companies” and thereafter

to add the words “association of persons and individuals” in
column (2) against S. No. 4 in the Table of Eleventh Schedule

Clause 5(21)(b) Seeks to add a new S. No. 14 and entries relating thereto in

columns (2), (3) and (4) after S. No. 13 in the Table of Eleventh
Schedule

Clause 5(22) Seeks to add provisos after clause (i), in clause (2), under the

heading “Procedure and Conditions, after the Table, in the Twelfth
Schedule

116

INCOME TAX ORDINANCE, XLIX OF 2001

Clause 6(1)(a)(b)(c)

(d)(e) (f)(g)(h)(I)&(J)

Clause 6(2)

Clause 6(3)

Clause 6(4)

Clause 6(5)

Clause 6(6)(a)&(b)

Clause 6(7)

Clause 6(8)

Clause 6(9)

Clause 6(10)

Clause 6(11)

Seeks to insert, omit, and rationalize various definitions, including Algorithmic Settlement Mechanism, Authorised Shipping Agent, electronically readable format, National Faceless Centre, and PRAL, and to omit obsolete definitions.

Seeks to make consequential amendments, including omission of the proviso relating to surcharge provisions.

Seeks to provide that tax on digital transactions shall be adjustable for persons exceeding the specified turnover threshold.

Seeks to omit provisions relating to deemed income on capital assets.

Seeks to introduce a tax regime on certain life insurance and family takaful payouts.

Seeks to make consequential amendments arising from the insertion of section 7G and omission of section 7E.

Seeks to provide for disallowance in cases of failure to install prescribed electronic resources and integration systems.

Seeks to empower the Federal Government to rationalize specified withholding tax rates having the character of minimum tax.

Seeks to substitute the tax credit regime relating to integration.

Seeks to provide the cost basis for inherited immovable property.

Seeks to clarify the treatment of transmission through family settlement after death.

117

Clause 6(12)

Clause 6(13) (a)&(b)

Clause 6(14)

Clause 6(15) (a)&(b)

Clause 6(16) (a)&(b)

Clause 6(16)(c)

Clause 6(17)

Clause 6(18)

Clause 6(19)

Clause 6(20)(a)&(b)

Clause 6(21)

Clause 6(22) (a)(b)

Seeks to include limited liability partnerships within the definitional framework.

Seeks to amend provisions relating to the taxation of associations of persons.

Seeks to amend the provisions of section 99B.

Seeks to insert a new provision relating to the NCCPL capital gains tax mechanism.

Seeks to provide for electronic filing of financial statements in electronically readable format.

Seeks to allow voluntary revision of returns for settlement of tax proceedings.

Seeks to insert a new section establishing the framework for faceless assessment, audit, and rectification.

Seeks to insert a new section establishing faceless appellate proceedings before the Commissioner (Appeals).

Seeks to insert a new section establishing an Independent Case Scrutiny Committee for higher court litigation.

Seeks to provide for reconstitution of the ADR Committee in specified cases.

Seeks to establish the statutory framework for the Algorithmic Settlement Mechanism.

Seeks to introduce the authorised shipping agent regime and related compliance obligations.

118

Clause 6(23)

Clause 6(24)

Clause 6(25)

Clause 6(26)

Clause 6(27)

Clause 6(28)

Clause 6(29)

Clause 6(30)

Clause 6(31)(a)(b)
&(c)

Clause 6(32)

Clause

6(33)(a)(b)(c)(d)(e)

(f)(g)&(h)

Clause 6(34)

(a)(b)&(c)

Clause 6(35)

Seeks to omit sub-section (6C) of section 147.

Seeks to insert a new section relating to certain payments made by life insurance companies and takaful operators.

Seeks to substitute sub-section (1DA) of section 152.

Seeks to introduce withholding tax on social media and influencer revenues.

Seeks to insert two new provisions in section 159.

Seeks to insert a new section for reporting of financial transaction data by banking companies and financial institutions.

Seeks to make consequential amendments relating to final tax provisions.

Seeks to strengthen the framework for electronic integration and invoicing systems.

Seeks to expand the framework for banking data exchange and the centralized repository.

Seeks to provide for re-audit, inventory valuation, and actuarial valuation powers.

Seeks to rationalize and enhance penalties.

Seeks to reduce the tax liability threshold for ATL status.

Seeks to transfer uniform provisions to the newly inserted section 237C.

119

Clause 6(36)

Clause 6(37)(a)&(b)

Clause 6(38)

Clause 6(39)

Clause 6(40)

Clause 6(41)(i)&(ii)

Clause 6(42)

Clause 6(43)

Clause 6(44)(a)(b)
&(c)

Clause 6(45)(a)(b)
&(c)

Clause 6(46)

Clause 6(47)(a)&(b)

Seeks to insert a new section regarding faceless jurisdiction of income tax authorities.

Seeks to amend provisions relating to disclosure of anonymized taxpayer data to researchers and specialists.

Seeks to replace auditors with audit mentors and sectoral experts.

Seeks to establish the framework for the National Faceless Centre.

Seeks to establish the Directorate General (Enforcement), Inland Revenue.

Seeks to amend clause (b) of sub-section (6) of section 231B.

Seeks to consolidate uniform provisions under section 237C.

Seeks to omit section 236CA.

Seeks to make amendments relating to insurance payouts, social media income, exporters, minimum tax, omission of deemed income tax rates, revision of super tax rates, and changes in tax slabs for salaried persons; and amendments in Divisions X and XVIII relating to immovable property.

Seeks to insert new provisions and make consequential amendments, including reduced-rate and exemption provisions in Parts I, II, and IV.

Seeks to omit rule 5 of the Eighth Schedule.

Seeks to omit rule 1A and clause (y) of rule 10 of the Tenth Schedule.

120

FEDERAL EXCISE ACT, 2005

Clause 7(1)(a) Seeks to insert new clause (2A) after clause (2) of section 2

Clause 7(1)(b) Seeks to insert new clause (9b) after clause (9a) of section 2

Clause 7(1)(c) Seeks to insert new clause (16A1) after clause (16) of section 2

Clause 7(1)(d) Seeks to insert new clause (19b) after clause (19a) of section 2

Clause 7(2) Seeks to insert new sub-section (3B) after sub-section (3A) of section 3

Clause 7(3) Seeks to insert new section 7A after section 7

Clause 7(4) Seeks to substitute sub-section (1) of section 18

Clause 7(5)(a) Seeks to substitute the words “Officer of Inland Revenue” for the words

“Federal Excise officer” in clause (a) of sub-section (2) of section 19

Clause 7(5)(b) Seeks to substitute sub-section (4) of section 19

Clause 7(6) Seeks to substitute sub-section (1) of section 26

Clause 7(7) Seeks to substitute sub-section (1) of section 27

Clause 7(8) Seeks to substitute the words “officer of Inland Revenue” for the words

“Federal Excise officer” in sub-section (1) of section 33

Clause 7(9) Seeks to insert new section 34AA after section 34A

Clause 7(10) Seeks to substitute the words “of Inland Revenue” for the words “federal

excise” in section 43A

Clause 7(11) Seeks to substitute the words the words “Officer of Inland Revenue” for

the words “Federal Excise Officer” in sub-section (3) of section 44

Clause 7(12) Seeks to substitute section 45A

Clause 7(13)(a) Seeks to substitute sub-sections (1), (2) an (2A) of section 46

121

Clause 7(13)(b) Seeks to substitute provisos in sub-section (3) of section 46

Clause 7(13)(c) Seeks to insert new sub-section (3A) amended as aforesaid after sub-

section (3) of section 46

Clause 7(14)(I)(a) Seeks to substitute the word “ten” for the words “forty four” against S.

No. 7a of Table-1 of First Schedule

Clause 7(14)(I)(b) Seeks to substitute in order to increase FED on e-liquid at Rupees

sixteen thousand five hundred per kg” from rupees ten thousand per kg or sixty five percent of the retail whichever is higher against S. No. 8a of Table-1 of the First Schedule

Clause 7(14)(I)(c) Seeks to substitute the expression “2027” for expression “2026” in

column (2) against S. Nos. 55 and 55B of Table-1 of First Schedule

Clause 7(14)(I)(d) Seeks to insert new S. No. 55A after S. No. 55 in Table-1 of First

Schedule

Clause 7(14)(I)(e) Seeks to substitute the expression “excluding mineral waters, aerated

waters, hydration drinks/ electrolyte beverages specifically formulated to support hydration, electrolytes replenishment not containing sugar exceeding 5g/ 100 ml or artificial sweetener.” for the expression “excluding mineral and aerated waters” in column (2) against S. No. 59 of Table-1 of the First Schedule

Clause 7(14)(I)(f) Seeks to substitute S. No. 63 of Table-1 of the First Schedule

Clause 7(14)(I)(g) Seeks to add new S. No. 65 and entries relating thereto in columns (2),

(3) and (4) after S. No. 64 of Table-1 of First Schedule

Clause 7(14)(I)(h) Seeks to substitute Restriction-2 in Table-1 of First Schedule

Clause 7(14)(2) Seeks to insert new Table 1A and entries relating thereto in columns

(2), (3) and (4) after Table-1 of First Schedule

122

Clause 7(14)(3) Seeks to substitute S. No. 3 in column (2), for sub-clause (ii) of clause

(b) and entries relating thereto in column (4) in Table-II of First Schedule

Clause 7(15) Seeks to add new S. No. 5 and entries relating thereto in columns (2)

and (3) after omitted S. No. 4 of Second Schedule

Clause 7(16) Seeks to insert new S. No. 28 and entries relating thereto in columns

(2) and (3) after S. No. 27 in Table-I, in the Third Schedule

123

The Statement of estimated Tax Expenditure of the Federal Government as

required under Section 8 of Public Finance Management Act 2019 is appended at the end of this bill as Annex-A.

124

Consultancy

Finance Bill 2026 issued by Parliament

Finance Bill 2026 issued by Parliament

M Waheed Ensari

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