The Senate Standing Committee on Finance, during its review of the Finance Bill 2025 on Wednesday, rejected the proposed tax on individuals engaged in small-scale online businesses and recommended raising the income tax exemption threshold to Rs1.2 million annually.
Chaired by Senator Saleem Mandviwala, the committee endorsed the proposal to tax income earned by online academies and digital educators but opposed taxing the income of elite institutions like the Islamabad Club.
Officials from the Federal Board of Revenue (FBR) informed the committee that digital educators were earning between Rs20 to 30 million and that a new clause in the Finance Bill aimed to bring e-commerce activities under the tax net. According to the FBR, the proposed tax would apply to a wide range of digital services, including:
- Online marketplaces and e-commerce sellers
- Audio, video, and music streaming platforms
- Cloud computing and software applications
- Telemedicine and digital learning platforms
- Online banking, architecture, research, consultancy, and accounting services
Despite these broad categories, the committee rejected the proposal to tax individuals operating small online businesses.
FBR Chairman Rashid Langrial noted that individuals earning Rs1.2 million annually would be required to pay Rs12,500 in taxes. However, Senator Shibli Faraz argued that income between Rs600,000 and Rs1.2 million should remain tax-exempt.
Langrial also mentioned plans to tax exclusive entertainment clubs such as the Islamabad Club, stating these venues cater to a limited elite group and offer no benefit to the general public. However, the committee chair opposed this proposal.
FBR officials further revealed a plan to restrict non-filers from purchasing property and vehicles, setting a maximum purchase limit at 130% of their declared income. In response, Senator Mohsin Aziz suggested increasing this cap to 500%, a recommendation the committee endorsed.
Finance Minister Muhammad Aurangzeb assured the committee that efforts are underway to expand the tax net by targeting non-filers and improving compliance.
