KARACHI: The Public Accounts Committee (PAC) of the Sindh Assembly on Wednesday expressed strong reservations over the deduction of billions of rupees by the Federal Board of Revenue (FBR) as at-source withholding tax on bank transactions of provincial autonomous bodies, and decided to raise the matter with the federal government.
Chairing the meeting, PAC Chairman Nisar Ahmed Khuhro said that the practice amounted to an “unjustified recovery” from Sindh, noting that other government departments were exempt from such deductions through Free Tax Numbers (FTNs).
The committee was reviewing audit paras of the human settlement, spatial development and social housing department for 2024 and 2025.
According to the audit, a bank deducted Rs125 million as at-source withholding tax on the department’s transactions on behalf of the FBR. The report observed that the department had failed to obtain an FTN, resulting in an unnecessary financial burden on the public exchequer.
Committee expresses concern over delay in development of Larkana Special Economic Zone development
The department’s secretary told the PAC that banks were deducting the tax at source and depositing it with the FBR. He said that repeated written requests had been made to the FBR for an FTN and exemption, but no response had been received.
The secretary further stated that the FBR had not issued FTNs to any of Sindh’s autonomous bodies or authorities, leading to continued deductions.
The director general-audit informed the committee that government departments were normally issued FTNs, which exempted them from withholding tax on bank transactions.
The PAC chairman said that if the exemption was available to other departments, it should be extended to all Sindh government autonomous bodies.
The PAC decided to write to Chief Minister Syed Murad Ali Shah and the chief secretary, urging them to take up the issue with the Centre and the FBR.
The committee also expressed displeasure over delays in developing the 191-acre Larkana Special Economic Zone.
Khuhro criticised the industries department for failing to hold balloting for plots, facilitate industrial units, and provide basic infrastructure, including a 17-kilometre gas pipeline and water supply.
The industries secretary told the committee that work on the suspended gas pipeline had resumed in coordination with Sui Southern Gas Company and would connect the zone to the network.
The managing director of SITE said that 27 applications for plots had been received, of which 19 were approved.
The PAC sought a comprehensive report from the industries department within a week and decided to write to the managing director of the Sui Southern Gas Company Limited for details on the pipeline’s status and expected completion.
Published in Dawn, July 2nd, 2026