• Senate panel hears chambers’ concerns over taxmen’s arrest powers; officials say fears ‘overblown’
• Committee agrees seeking amendments in Finance Bill so soon after its passage would be imprudent

ISLAMABAD: The government on Thursday reported more than Rs2.2 trillion worth of tax evasion through ‘fake’ and ‘flying’ invoices over the past two fiscal years, highlighting the massive scale of loss of public monies due to weak enforcement.

Testifying before the Senate Standing Committee on Finance and Revenue, Federal Board Of Revenue (FBR) Member Hamid Atique Sarwar said that more than Rs873bn in ‘fake’ and ‘flying’ invoices had been unearthed last year, on top of Rs1.37 trillion a year earlier, taking the total to Rs2.25tr in two years.

“This is almost one-third of the total” tax collected on the customs side, he said in response to calls from the business community for a relaxation in tax laws under the Finance Bill 2025-26.

Mr Sarwar said such massive loss of revenue could not be allowed to continue, adding that taxmen misusing their powers had been proceeded against.

He said no other department at the federal or provincial level had taken punitive action against its own workforce like FBR had.

He said the law in place since 1996 envisaged arrest if an assistant commissioner had reasons to believe that tax evasion was taking place, record was being tampered or suspects were fleeing abroad. But the latest Finance Bill provided multiple safeguards to avoid harassment of businessmen and taxpayers.

The committee held an extensive discussion on several anomalies in the Budget 2025–26, including briefings from members of the chambers of commerce, with a specific focus on clauses granting powers of arrest to the FBR on the basis of mere suspicion.

State Minister for Finance and Revenue Bilal Azhar Kiyani said the prime minister had constituted a committee to redress the grievances of the chambers.

Moreover, a review and redressal committee had also been constituted for a periodic review of the business community’s issues.

Mr Kiyani said a circular would be issued soon to clarify the lacunae highlighted by the chambers, following detailed discussions with business community.

Senator Saleem Mandviwalla, who chaired the meeting, and the other members agreed with the state minister that it would not be good optics to seek amendments to the finance bill just a month after its passage, with the consent of the International Monetary Fund .

Another FBR member, Dr Najeeb, said the government had diluted the taxpayers powers following pushback from coalition partners, parliamentarians and others and there had been a lot of difference between the finance bill originally introduced in the parliament and later passed by the parliament.

He said conceded that the extensive deliberations over the finance bill with the standing committees of the National Assembly and the Senate did not leave them enough time for the usual anomaly committees to address all concerns, leaving some room for misunderstandings.

However, he maintained that the “element of fear” was being unnecessarily overblown.

While discussing software exports over the last 15 years, the committee recommended the State Bank of Pakistan to submit data with the clear categorisation of freelancers share in software exports.

The committee also recommended the removal of periodical and journal subscriptions from the IT services list.

Published in Dawn, July 25th, 2025