Rs750 billion in undeclared deposits exposed: Senate Committee targets tax evasion

The Senate Standing Committee on Finance and Revenue spotlighted a major gap in Pakistan’s tax system, revealing that 8,697 individuals hold

Islamabad: The Senate Standing Committee on Finance and Revenue spotlighted a major gap in Pakistan’s tax system, revealing that 8,697 individuals hold undeclared bank deposits totaling approximately Rs750 billion. This underscores a critical need to broaden the tax base and improve compliance. The revelation came during the committee’s third consecutive session examining the Finance Bill 2026, chaired by Senator Saleem Mandviwalla.

The session, held at Parliament House, brought together Federal Finance Minister Muhammad Aurangzeb, Minister of State for Finance Bilal Azhar Kayani, Chairman Federal Board of Revenue Rashid Mahmood Langrial, along with committee members including Senators Abdul Qadir, Talha Mehmood, Shazaib Durrani, Anusha Rehman Ahmad Khan, Faisal Vawda, Syed Faisal Ali Subzwari, and Dilawar Khan. Representatives of the steel, telecom, and automobile sectors were also present.

The committee conducted a clause by clause review of the Income Tax Ordinance, 2001, with a focus on revenue mobilization, industrial facilitation, and digital monitoring initiatives. FBR officials briefed members on measures to ensure equitable taxation, including exemptions, rationalized super tax rates, and proposals for industrial refunds linked to electricity consumption.

Significant deliberations focused on the taxation of digital and social media incomes. A five percent withholding tax was approved for annual income between Rs600,000 and Rs1.2 million, while incomes below Rs600,000 remain exempt. Proposals affecting mutual funds, modarabas, life insurance profits, and property inheritance tax exemptions were also reviewed.

The session highlighted government initiatives to modernize tax administration through the National Faceless Audit Wing, AI-supported risk assessments, and a centralized data hub. These measures aim to strengthen documentation, reduce administrative burdens, and enhance compliance.

In addition to these reforms, the committee scrutinized the impact of exemption thresholds, with the FBR noting that increasing the exemption limit from Rs500 million to Rs1 billion could result in an estimated revenue shortfall of Rs250 billion. The discussion emphasized balancing taxpayer relief with fiscal sustainability.

The committee will continue its detailed review in subsequent meetings, with the next session