ISLAMABAD – The government informed a parliamentary committee on Tuesday that it has reduced taxes on the import of used cars and lifted the restriction on vehicle age limits, while failing to secure approval from the International Monetary Fund (IMF) for exempting stationery items such as pencils and exercise books from sales tax.
Briefing the Senate Standing Committee on Finance, Commerce Secretary Jawad Paul said that under commitments with the IMF, the restriction limiting imports to five-year-old used vehicles would be removed from July, subject to compliance with environmental standards. He added that the additional regulatory duty on imports would be reduced from 40pc to 30pc next month.
He said the relaxation in used car import restrictions was being implemented in phases in line with IMF conditions aimed at opening the market and ensuring equal opportunity for overseas sellers.
Separately, officials told the committee that proposals to exempt educational stationery from sales tax had not been accepted. Director General of the Tax Policy Office Dr Najeeb Memon said the IMF had opposed exemptions for the education sector, including stationery goods.
He said tax exemptions could not be extended to all essential items. In the last budget, an 18pc sales tax was imposed on pencils, geometry boxes, sharpeners, exercise books, and related items, significantly increasing prices.
The Finance Bill 2026-27 has retained the taxation on these items, even as other goods such as contraceptives and sanitary products have been exempted.
Finance Minister Muhammad Aurangzeb, who attended meetings of both parliamentary committees, also ruled out tax relief for the beverages sector and rejected a proposal to reduce federal excise duty by 5pc in exchange for higher revenue generation.
He further declined to provide additional tax concessions to exporters, stating that the government had already introduced relief measures, including reductions in advance income tax, abolition of super tax on exports, and concessional interest rates for exporters.
Senator Mohsin Aziz of the Pakistan Tehreek-i-Insaf (PTI) warned that existing policies could negatively affect export performance in the coming fiscal year, arguing that the tax framework remained challenging for businesses.
On the National Tariff Policy, the commerce secretary informed the committee that under a five-year reform plan, average tariffs are targeted to fall to 13pc from July. However, he said the revised average is expected to remain at 13.77pc due to slower reductions in the previous year and sectoral adjustments.
He added that regulatory duties, except on alcohol, had been reduced to 20pc. The government has retained a 90pc duty on alcohol, despite a ban on its import in the country.
The total fiscal impact of tariff reductions for the next year has been estimated at Rs143.4 billion.
Meanwhile, the National Assembly Standing Committee on Finance approved amendments granting special judges the authority to freeze the assets of under-trial accused persons under the Customs Act, including properties held in their name or through third parties.
Officials from the Federal Board of Revenue (FBR) said the provision was aimed at preventing the transfer of assets to evade confiscation. However, concerns were raised regarding safeguards for third-party holders of such assets.
The committee also approved removing the requirement for debit or credit card machines for small traders under a new fixed tax scheme. Officials said the FBR aimed to bring 100,000 large traders into the tax net, but only 37,000 had been registered so far.
The committee rejected a proposal to empower the FBR to exclude any category of traders from the definition of large traders, citing concerns over potential misuse of authority.
A decision on a proposal to impose Rs30 per unit sales tax on electricity supplied to steel melting and re-rolling mills was deferred amid divisions within the sector.
