Senate Finance Committee approves new tax measures, SCO Summit vehicle exemptions

The Senate Standing Committee on Finance, chaired by Senator Saleem Mandviwala of the Pakistan People's Party (PPP), resumed its budget review session after a break, with Federal Minister for Finance and Revenue Muhammad Aurangzeb and Minister of State for Finance Bilal Azhar Kayani in attendance.

The committee continued its detailed examination of budget proposals, tax measures and revenue-related matters for the fiscal year 2026-27, while considering various recommendations aimed at strengthening government revenues.

During the meeting, the committee approved a proposal to exempt from sales tax the import of vehicles required for the upcoming Shanghai Cooperation Organisation (SCO) Summit and for countering terrorism-related threats. The committee also approved the import of bulletproof vehicles for heads of state and dignitaries participating in the SCO Summit.

Officials informed the committee that the import of such vehicles would require prior approval from both the Ministry of Foreign Affairs and the Ministry of Interior. Bilal Azhar Kayani told the committee that bulletproof vehicles were being imported to ensure secure transportation arrangements for visiting heads of state during the summit.

The committee further approved a proposal allowing the import of vehicles for counterterrorism purposes but amended the measure by imposing limits on the number of vehicles that can be imported. The Ministry of Interior will determine the operational requirements and necessity of such vehicles.

In a significant revenue-generating measure, the committee approved the inclusion of 3,400 items across 20 categories in the Third Schedule of the Sales Tax Act. According to Federal Board of Revenue (FBR) officials, the move is expected to generate an additional Rs60 billion in revenue.

FBR officials clarified that no new tax was being introduced; however, the standard sales tax regime would now apply to these products. Following their inclusion in the Third Schedule, the applicable sales tax rate will be 18 percent, while certain items sold in retail packaging will be subject to a 12 percent sales tax.

Officials informed the committee that products likely to be affected include baby formula, milk, edible oil, sweets, packaged food items, yogurt, agricultural medicines and pesticides. In addition, all categories of branded clothing and footwear will also fall under the standard sales tax framework.

The committee is expected to continue deliberations on budgetary proposals and taxation measures in upcoming sessions before final recommendations are presented to Parliament.