FBR barred from cancelling ST registration, blacklisting units

ISLAMABAD: National Assembly Standing Committee on Finance Tuesday stopped the Federal Board of Revenue (FBR) from cancelling sales tax registrations or blacklisting of units, which would fail to install electronic monitoring system at manufacturing premises or not complying with FBR’s electronic system for issuance of sales tax invoices. On Tuesday, FBR Member Dr. Hamid Ateeq Sarwar strongly defended FBR’s policies and enforcement measures in the Finance Bill 2026 and took a bold stance on the behalf of the entire tax machinery before the finance committee. During review of Finance Bill 2026 here on Tuesday, National Assembly Standing Committee on Finance approved a substantial raise in penalties for sales tax non-compliance by registered units. However, the committee limited the proposal of punishment of non-compliance to the extent of suspension of sales tax registration. The committee further directed the FBR to revise the proposal on “de-registration, backlisting and suspension of registration” of registered persons, who do not comply with the Board’s electronic system and monitoring of production. FBR Member Dr. Hamid Ateeq Sarwar informed the National Assembly Standing Committee on Finance that the production monitoring system will be installed at 19 new sectors including tiles, textile, milk, tea, juices, poultry pharmaceutical sector, leather, paper/paper board and others. The system has already been installed at four sectors and partially at another four sectors. FBR Member disclosed that there is a reluctance from the textile spinning sector to comply with the digital production systems at their manufacturing premises. He said that the 400 spinning units are our main target within the textile chain. Out of 400 units, only 21 have done compliance and others have also taken stay from court. “We do not want to hurt exporters, but we are committed to focus on textile spinning units, ” he said. The FBR can install this technology at textile spinning units, but cannot enforce at ginning stage due to outdated technology at ginners. FBR Member said that 2-3 million bales are evaded by the textile spinning units, which would be checked through production monitoring. About the enhanced penalties on sales tax non-compliance, FBR Member said that sales tax invoices worth Rs60-70 trillion are coming into the FBR’s system. When Chairman of the committee Syed Naveed Qamar asked FBR Member to give details of businessman arrested during the last one year after introduction of sales tax law in last budget, Dr. Hamid Ateeq Sarwar stated that not a single person has been arrested during the last one year. “We are unable to do anything after implementation of this revised law of arrest and prosecution in last budget. We should have been confined to the old law instead of amending it last year. The old sales tax powers were better than last year’s law. The FBR has realised that it should not have introduced the revised law of arrest and prosecution in last year’s Finance Bill, ” he remarked. The committee rejected the sales tax proposal to publicly disclose information of sales tax registration persons within sectors to name and shame. Therefore, the proposal on “Disclosure of information by a public servant” has been dropped under the Finance Bill 2026. Committee Members Hina Rabbani Khar and Sharmila Faruqui talked about the tax leakages and problems in the FBR. FBR Member strongly responded that the FBR is the only institution in Pakistan which daily collects around Rs40 billion for the national exchequer and it is not appropriate to declare us as super-corrupt people. Tax machinery is working day and night in the field formations and trust us on administrative and enforcement policies being introduced through Finance Bill 2026, he added. Copyright Business Recorder, 2026

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