The Senate Standing Committee on Finance has endorsed a proposal to impose taxes on the profits and assets of exclusive private clubs, describing them as extravagant retreats for the wealthy that contribute little to public revenue.
Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial, while addressing the committee chaired by Senator Saleem Mandviwalla, said that elite clubs such as the Islamabad Club serve only a small number of affluent individuals while maintaining reserves worth billions.
“These institutions have become playgrounds for the rich, sitting on enormous land assets and bank balances. It’s only fair they begin contributing through taxes on their profits,” Langrial stated.
The committee backed the FBR’s proposal, which targets high-end recreational centers operating across the country.
Langrial also outlined several proposed revisions to the income tax structure for the upcoming fiscal year. Among the key proposals is a tax exemption on income up to Rs600,000 annually. Individuals earning between Rs600,000 and Rs1.2 million would face a modest 2.5% tax rate.
He emphasized that a monthly earner of Rs100,000 would pay only Rs1,000 in taxes — a burden he deemed manageable.
However, some senators expressed concerns over the adequacy of relief for the salaried class. Senator Mohsin Aziz suggested raising the exemption threshold to Rs1.2 million, while Senator Shibli Faraz highlighted inflation’s impact on real income.
The committee also rejected a proposed tax on online businesses, citing the importance of supporting Pakistan’s growing digital economy. Lawmakers stressed the need to nurture e-commerce rather than burden it with additional taxation.
Meanwhile, the FBR estimates Rs65 billion in extra revenue in the coming fiscal year from proposed taxes on e-commerce and global digital platforms operating in Pakistan. One such measure involves increasing the advance tax on offshore digital services — like Google and YouTube — from 10% to 15%, aiming to push them toward establishing local offices.
In a related development, the federal government has introduced significant income tax relief for salaried individuals in the 2025–26 budget. Announced by Finance Minister Muhammad Aurangzeb, the revised tax structure includes rate reductions across several income brackets.
The most notable relief is for those earning up to Rs2.2 million annually, with the tax rate reduced from 15% to 11%. Individuals earning between Rs2.2 million and Rs3.2 million are expected to see a tax cut from 25% to 23%.
Aurangzeb stated that the government is committed to adjusting income tax in line with inflation and creating a fairer, more efficient taxation system.
