New taxation measures: No contingency plan despite Rs275bn shortfall: FBR chief

ISLAMABAD: Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial has ruled out any contingency plan in terms of implementing new taxation measures despite a revenue shortfall of Rs 275 billion during the July-October (2025-26) period.

During a presentation of the FBR Chairman on economic reforms held at the FBR Auditorium on Monday, he admitted that the FBR’s shortfall in tax collection stood at Rs 275 billion during the first four months of 2025-26, but noted that no emergency tax measures would be required this year.

He recalled that last year, I said that no contingency measures would be taken, and the same would be the case in the current fiscal year.

‘Payment with returns’: FBR collects mere 4pc of total revenue in FY25

He said that there is no immediate need for the imposition of new taxes, stressing the importance of improving tax compliance and broadening the tax base to strengthen revenue collection.

The FBR Chairman revealed that tax collection and compliance have improved significantly this year, noting that income tax returns rose by 18 percent, bringing the total number of taxpayers to 5.9 million. The income tax number of individuals increased by 18 percent during the current fiscal year. However, the tax paid along with the returns amounted to Rs 69 billion during 2024-25.

He said the number of tax return filers has increased from 4.9 to 5.9 million, and the FBR had taken approval for transformation since last November.

He stated that the FBR has increased the tax-to-GDP ratio by 1.5 percent for the first time, reflecting stronger compliance measures and coordination with institutions. “The rate of submission of individual tax returns has increased. The FBR does not need to impose more taxes,” he added.

“The FBR revenue to GDP ratio has increased to 10.33 percent in 2024-25 against 8.83 percent in 2023-24, which is the highest growth in the last 23 years”, he pointed out. Langrial stated that the Tax to Gross Domestic Product (GDP) increased by 1.49 percent in one year.

The Chairman said that the tax ratio from provincial revenue and Petroleum Development Levy (PDL) has to be taken to 18 percent, and 15 percent revenue has to be collected from the federation, and three percent from the provinces.

Langrial said there is not as much pressure on the provinces as there is on the federation for revenue, and this year, individual tax return files increased by 18 percent.

He Langrial said that the government’s target is to raise the overall tax-to-GDP ratio to 18 percent within the next three to four years, with cooperation of the provincial governments.

He also spoke about challenges faced by tax enforcement teams, including threats and attacks during operations. “Two of our people were martyred in the suburbs of the Kohat tunnel. Our training is not to fight, but to enforce tax compliance. Now, with the support of Rangers and other institutions, this work has become safer and more effective,” he said. He stated that several policy measures have already been implemented, resulting in the FBR’s share in total revenue rising from 8.36 percent to 10.33 percent. The tax-to-GDP ratio has improved by 1.5 percent in a single year, he added.

He highlighted that the income tax gap stands at Rs1.7 trillion, of which Rs1.2 trillion is attributed to top-income earners, while the remaining Rs200 billion comes from other taxpayers. He also mentioned that over 160 Rangers personnel are assisting the FBR in enforcement operations.

Langrial emphasized that the FBR has been freed from political and administrative interference and is now focused on broadening the tax revenue base to strengthen the national economy.

The tax collection rate in the tobacco sector has been increased, and there is a huge list of options on which work has been done in the FBR, he said. Major tax reforms have been implemented, and the government is committed to broadening and deepening the tax net to enhance revenue collection, he added.

Copyright Business Recorder, 2025