ISLAMABAD: The Federal Board of Revenue (FBR) has collected around Rs620 billion from electricity consumers through sales tax and withholding tax on power bills, the National Assembly Standing Committee on Finance and Revenue was informed on Wednesday.
Officials told the committee that the FBR applies 18 percent General Sales Tax (GST) on electricity consumption, while withholding tax is charged on bills exceeding Rs100,000 per month, contributing to total recoveries of approximately Rs620 billion.
The briefing also highlighted growing parliamentary debate over the government’s proposed Retailers Fixed Scheme, with PPP MNA Sharmila Sahiba Faruqui terming it a form of tax amnesty due to the absence of audit requirements for compliant retailers. However, the committee approved the scheme, with Chairman Syed Naveed Qamar stating that the initiative is necessary to bring around 3.5 million retailers into the tax net.
Minister of State for Finance Bilal Azhar Kayani and FBR officials defended the scheme, rejecting claims that it constitutes an amnesty. They argued that under IMF and FATF frameworks, formal tax amnesties are not permissible, and voluntary compliance remains the only viable approach to expanding the tax base.
FBR Member Dr. Hamid Ateeq Sarwar explained that while the scheme allows simplified taxation, it does not include traditional amnesty features such as asset whitening or exemption from scrutiny. He added that audit mechanisms remain in place for significant discrepancies and that the Compliance Risk Management (CRM) system, supported by international data-sharing from 57 countries, strengthens enforcement capacity.
Officials further informed the committee that although over 7.5 million tax returns are filed annually, the FBR currently has the capacity to audit less than one percent of them. The new framework aims to address this gap through automation and data-driven enforcement.
FBR Chairman Rashid Mahmood Langrial also presented details of a new tax operating model based on Artificial Intelligence, which will gradually introduce a National Faceless System from October 1, 2026.
He said the system will use over 450 risk-based triggers to identify discrepancies, including property transactions, bank deposits, and income declarations. According to him, nearly 80 percent of high-value property transactions remain undeclared, while thousands of individuals report zero income despite holding significant bank deposits.
Finance Minister Muhammad Aurangzeb told the committee that the new system is designed to detect revenue leakages and reduce taxpayer harassment through a fully digital and transparent framework.
Under the proposed structure, the FBR will be reorganized into three functional wings: a Faceless Audit Wing, a National Assessment Wing, and a Field Operations Wing, each with clearly separated roles ranging from audits to enforcement.
Officials said taxpayers will be given multiple opportunities to correct discrepancies before enforcement actions are taken, including AI-generated alerts, audit reports, and final notices with appeal rights.
The faceless system will be rolled out in phases starting in 2026, initially covering salaried individuals, followed by other taxpayer categories in subsequent phases. Authorities added that the system has already improved customs revenue efficiency by 19 percent through reduced human discretion and increased automation.
Story by Mehtab Haider
