NA body told: Many amendments incorporated in Finance Bill

ISLAMABAD: Major amendments have been proposed in the Finance Bill 2026 to incorporate key recommendations of the National Assembly and Senate Standing Committees on Finance including reduction in import duties and taxes on mobile phones valuing USD31-USD200. Federal Board of Revenue (FBR) Member (Strategic Transformation) Dr. Hamid Ateeq Sarwar informed the National Assembly Standing Committee on Finance on Sunday that a large number of amendments proposed by both the Finance Committees have been incorporated in the amended Finance Bill 2026. Any additional relief measure, proposed through amended Finance Bill 2026, would require alternate revenue generation measures to offset the revenue loss in 2026-7. The numbers of taxation/policy measures have been locked with the International Monetary Fund (IMF), FBR Member added. READ MORE: Imported mobile phones: Panel directs MoF, FBR to rationalise duties, taxes Another change in the Finance Bill 2026 is that the special excise duty on luxury EVs and other luxury vehicles would be charged based on the value of the vehicles to be calculated in US dollars. The amended Finance Bill 2026 may include all airlines to avail sales tax exemption at import stage after one year (July 1, 2027). FBR Chairman Rashid Mahmood Langrial told the committee that 20 percent reduction in regulatory duty would be implemented on the import of high-end phones from July 1, 2026 with a relief of Rs14, 000 on each phone. This relief is part of the overall duties reductions under the tariff rationalization policy. Sharing recommendations for the Finance Bill, 2026, FBR Chairman requested to maintain the existing tax structure on imported mobile phones. It is progressive, equitable over a realistic horizon, and revenue-buoyant. No restructuring of rate bands is warranted. The FBR Chairman, rejecting across-the-board or top-tier import-duty cuts, said that the premium imports carried the majority of import revenue and were bought by the most affluent. Around 95 percent of the phones used in Pakistan are locally assembled whereas 5 percent are imported. If any relief is given on the imported mobile phones, confine it strictly to the entry segment (USD31-USD200). This is the only place a concession would reach price-sensitive, first-time buyers, at low revenue cost, the FBR Chairman recommended. He added that 95 percent local share is the real driver of affordable access for the young population; component-stage (CKD/SKD) concessions should be preserved as the route to lower mass-market prices. Committee members observed that the imported mobile phones were no more luxury, but a necessity. The FBR Chairman responded by saying that reducing import duties on premium mobile phones would mainly benefit high-income consumers while causing a significant loss of government revenue. The flagship smartphones priced above USD500 account for only 16 percent of imported units but contribute 58 percent of total import-tax revenue, generating Rs21. 6 billion of a total of Rs36. 9 billion at the import stage. These devices are purchased predominantly by the highest-income segment of society. Any reduction in duties on top-tier imported phones would effectively transfer revenue benefits to affluent buyers, while providing little or no advantage to the broader market, around 95 percent of which is served by locally assembled mobile phones, the FBR Chairman added. Despite strong resistance of the Minister of State for Finance and the Secretary of Finance, the committee directed the FBR to incorporate an amendment in the Finance Bill 2026 to allow sales tax exemption to other airlines after a one-year period, i. e. July 1, 2027. The Secretary of the Ministry of Finance said that the issue of sales tax exemption to other airlines had been taken up with the IMF. However, the fund had rejected the proposal as we could not give sales tax exemptions under the structural benchmark agreed with the fund. Naveed Qamar, chairman of the committee, directed the government to include all airlines in the sales tax exemption clause or we will not clear exemption to only one airline. “It seems we have surrendered our sovereignty to the IMF, ” he said. “In case of all other airlines, the exemption will be implemented from July 1, 2027, ” Naveed Qamar added. Dr. Hamid Ateeq Sarwar cautioned that there was a danger that the fund might not allow any tax relief measures introduced though the amendments in the Finance Bill 2026. The Minister of State for Finance informed the committee that it was a conscious decision of the government for not decreasing prices of imported luxury vehicles used by the elite class. Under the phase-wise reduction on import duties on vehicles, the Secretary of Commerce said that the government had proposed a significant reduction in maximum tariff rates comprising Customs Duty (CD), Additional Customs Duty (ACD) and Regulatory Duty (RD) across different tariff slabs on imported vehicles from July 1, 2026. Under the proposal, the maximum tariff on vehicles above 1800cc had been reduced from the existing 156 percent import duties (100 percent CD, 6 percent ACD and 50 percent RD) to 74 percent (50 percent CD, 4 percent ACD and 20 percent RD). For vehicles in the 1500cc to 1800cc category, the combined tariff had been proposed to be lowered from 91 percent (75 percent CD, 6 percent ACD and 10 percent RD) to 57 percent (45 percent CD, 4 percent ACD and 8 percent RD). The import duties applicable on 1000cc to 1500cc vehicles has been proposed to decrease from 76 percent (60 percent CD, 6 percent ACD and 10 percent RD) to 52 percent (40 percent CD, 4 percent ACD and 8 percent RD). For 850cc to 1000cc vehicles, the maximum tariff has been proposed at 47 percent (35 percent CD, 4 percent ACD and 8 percent RD) as compared to the existing 71 percent (55 percent CD, 6 percent ACD and 10 percent RD). The maximum tariff on vehicles up to 850cc, bikes, vehicle bodies, had been proposed to reduce from 66 percent (50 percent CD, 6 percent ACD and 10 percent RD) to 42 percent (30 percent CD, 4 percent ACD and 8 percent RD). For the auto-parts sector, the proposed maximum tariff had been reduced from 61 percent (35 percent CD, 6 percent ACD and 20 percent RD) to 45 percent (25 percent CD, 4 percent ACD and 16 percent RD). Meanwhile, for specialized vehicles, the combined tariff had been proposed to decline marginally from 36 percent (30 percent CD, 6 percent ACD and zero RD) to 34 percent (30 percent CD, 4 percent ACD and zero RD). The FBR Member informed the committee that Special Excise Duty of 86 percent had been proposed to be applicable on luxury vehicles above 2000CC and up to 3000cc and 92 percent SED on luxury vehicles above 3000CC. Due to import tariff reductions, the prices of imported vehicles upto 2000cc would be reduced, the FBR Member added. Copyright Business Recorder, 2026

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