FBR, Jewelers fail to reach agreement on Section 175C

April 02, 2026 (MLN): Negotiations between the Federal Board of Revenue (FBR) and the All Pakistan Gems and Jewelers Association (APGJA) over the contentious Section 175C of the Income Tax Ordinance, 2001, ended without agreement on Wednesday.

This would likely escalate the risk of enforcement action and nationwide protests by the jewelry sector.

The impasse follows three rounds of talks between FBR Chairman Rashid Mehmood Langrial and APGJA President Qasim Shikarpuri, which failed to yield a compromise.

The association remained firmly opposed to the provision, signaling resistance if authorities proceed with implementation.

At the center of the dispute is Section 175C, introduced through the Finance Act, 2025, which authorizes tax officials to be stationed at business premises for real-time monitoring of production, supply chains, and inventory.

The measure forms part of a broader push by the government to tighten oversight in cash-heavy sectors and improve tax compliance.

Jewelry traders have rejected the move as intrusive, arguing it would disrupt business operations and undermine trust.

Qasim Shikarpuri said the sector already complies with existing tax laws and warned that physical monitoring inside shops is “unacceptable under any circumstances.”

The policy direction aligns with earlier directives from Prime Minister Shehbaz Sharif, who has called for intensified action against tax evasion and the informal economy.

The measure traces back to amendments introduced in 2025 aimed at strengthening enforcement mechanisms and addressing structural gaps in Pakistan’s tax system.

Deploying Inland Revenue officers at select business locations would enhance documentation in sectors that remain largely outside the formal tax net.

With positions hardening, the deadlock has raised the prospect of market disruption.

The APGJA is weighing protest options, including shutter-down strikes across major trading hubs, potentially adding pressure on authorities already grappling with revenue shortfalls.

Still, both sides have left the door open for further engagement. 

Qasim Shikarpuri said dialogue could resume if a “balanced solution” is explored, one that ensures compliance without impairing legitimate business activity.

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