The Senate Standing Committee on Finance and Revenue, under the chairmanship of Senator Saleem Mandviwalla, has concluded a critical round of deliberations on the Finance Bill 2025–26, leading to the rejection of the proposed carbon levy and the introduction of a new legislative measure targeting digital service providers. The meeting was attended by key government officials and legislators, including Finance Minister Muhammad Aurangzeb, State Minister for Finance Bilal Azhar Kayani, and Chairman FBR Rashid Mahmood Langrial.
One of the most debated proposals was the Rs. 2.5 carbon levy, which the committee ultimately decided to reject. Senator Mandviwalla stated that the Petroleum Division failed to offer a concrete and sustainable emission reduction plan, making the levy both premature and unjustified in its current form. Committee members argued that without a clear environmental framework, the imposition of such a charge would lack purpose and transparency.
The committee also scrutinized clauses in the Public Finance Management Act, expressing concerns over financial governance. Members objected to provisions that allow autonomous public entities to retain their funds, contributing only surplus profits to the consolidated public account. These provisions were seen as a loophole that could result in financial irregularities if not addressed. Recommendations were made to revise and rationalize these clauses to ensure accountability and financial discipline.
During the session, exemptions for businesses in Khyber Pakhtunkhwa and the newly merged tribal districts were also reviewed. Clarification was provided that cinema operators in these areas will enjoy tax exemptions until 2030, limited to five years from the start of operations. Additionally, withholding tax exemptions for businesses operating in the former FATA region have been extended until 2026 by FBR, a move aimed at supporting post-merger economic recovery.
A major development in the taxation of digital services was the formal introduction of the Digital Presence Proceeds Act. This new legislation, outlined by FBR Chairman Rashid Mahmood Langrial, seeks to impose taxes on digital platforms operating in Pakistan without any physical establishment in the country. The measure is designed to expand the tax net to include foreign digital service providers, ensuring equitable treatment of domestic and international digital businesses. The Act is considered a key component in modernizing Pakistan’s fiscal policies to reflect the growing role of the digital economy.
In a related update, NEPRA officials presented a plan addressing the country’s power sector circular debt through refinancing. Currently, a surcharge of Rs. 3.23 per unit is being recovered from electricity consumers. NEPRA proposed the removal of the 10 percent cap on this charge to facilitate refinancing of circular debt. The proposal is part of broader efforts to manage energy sector liabilities more efficiently.
Senators Syed Shibli Faraz, Mohsin Aziz, and Anusha Rahman Ahmad Khan also took part in the session, contributing to policy discussions around taxation, energy, and digital regulation. The decisions made during this session are expected to shape the fiscal direction of the country for the coming year, particularly in how it adapts to digital commerce, energy financing, and regional tax equity.
