Senate Panel Recommends Mandatory Credit/Debit Card Transactions for Purchases Exceeding Rs. 30,000

The Senate Standing Committee on Finance and Revenue convened its 9th consecutive session to finalize recommendations on the Finance Bill 2024-25.

During the meeting, the committee extensively deliberated on the Sales Tax Provisions of the Money Bill 2024. Chaired by Senator Saleem Mandviwalla, the session was attended by committee members including Senators Sherry Rehman, Farooq Hamid Naek, Anusha Rahman Ahmad Khan, Shahzaib Durrani, and Fesal Vawda. Senator Zeeshan Khanzada also attended as a special invitee, alongside representatives from the Federal Board of Revenue (FBR) and other relevant departments.

The committee revised the amendment related to the liability for tax payments or erroneous refunds, incorporating a default surcharge at the rate of KIBOR plus three percent per annum, whichever is higher.

Additionally, the committee proposed that transactions exceeding Rs. 50,000, excluding utility bill payments, must be made via a crossed cheque, bank draft, pay order, or other crossed banking instrument, transferring the sales tax invoice amount from the buyer’s business bank account to the supplier.

Members of the committee expressed dissatisfaction with taxes on stationery and essential daily items, particularly objecting to taxes on infant milk, arguing against burdening newborns. The committee criticized the Budget 2025, lamenting that it appeared more aligned with IMF priorities than national interests, citing concerns that it disproportionately taxed the poor, needy, and vulnerable.

Specifically, the committee strongly opposed taxes on stationery items such as colored pencils, pencils, and geometry sets, characterizing Budget 2025 as excessively burdened with taxes—a slogan of 18 percent GST on every item, further inflating the cost of living and diminishing public morale.

Anusha Rahman highlighted concerns over the taxation of medical equipment, emphasizing the impact on healthcare costs, including endoscopy, oncology, urology, gynecology, and disposable items. The committee also questioned the basis for granting tax exemptions to certain charitable hospitals, with the FBR clarifying that the Privilege Council Pakistan (PCP) holds the authority to grant such exemptions.

The committee further recommended subjecting donated goods to hospitals operated by non-profit institutions to similar customs duty conditions as those applying to goods with zero-rated customs duty.

Senator Anusha Rahman advocated against proposed tax structures for the telecom sector, particularly concerning cellular and satellite phones, suggesting differentiated tax rates based on import or supply values.

Concluding a rigorous nine-day session on deliberations over the Money Bill 2024, the committee issued recommendations aimed at benefiting the general public. Key recommendations included mandating credit/debit card transactions for purchases exceeding Rs. 30,000 to promote economic documentation, imposing uniform sales tax rates on solar industry components, withdrawing taxes on eight specified stationary items under the Finance Bill 2024, and requiring price labels on all consumer goods for informed purchasing decisions.

Additionally, recommendations were made to identify organizations exploiting tax exemptions under the guise of charitable status, provide additional allowances equal to 100 percent of basic pay for disabled individuals (comprising less than 2 percent of the workforce), and distinguish remote workers from freelancers for tax purposes.

The committee also proposed exempting corporate debit card transactions from an additional 5 percent tax to prevent double taxation and encourage foreign exchange earnings through ESFCAs.

Senator Sherry Rehman’s recommendations focused on clarifying a proposed increase in export taxes and introducing initiatives to alleviate poverty and unemployment, particularly targeting the 4 percent of Pakistanis living below the poverty line and the 6.3 percent unemployment rate affecting over 4.5 million people. She emphasized the need for targeted programs and essential services.

Senator Zeeshan Khanzada proposed reducing the sales tax rate on local supplies in FATA and PATA to 16 percent instead of the standard 18 percent, and reducing the tax on imported supplies in these regions to 3 percent until June 30, 2025, and 6 percent from July 1, 2025, to June 30, 2026.