OPINION: The quest for a wide tax net

“In FY 2024-25, percentage share of withholding taxes in total Income tax collection was 59 percent compared to 60 percent in previous financial year.

WHT collection reached Rs. 3,381.5 billion, a significant increase from Rs 2,739.1 billion in the previous financial year, marking a growth of 23.5 percent....Notably, WHT collection from salaries registered the highest increase of approximately Rs 214.2 billion (55 percent growth), primarily due to decrease in number of income tax slabs and increase of corresponding tax rates in each slab. This policy shift resulted in an increase from Rs 391.4 billion in FY 2023-24 to Rs 605.6 billion in FY 2024-25 under withholding tax collection from salaries”—‘Revenue Division 2025 Year Book’, Federal Board of Revenue.

The latest data confirm that FBR has failed on all fronts: collection targets, issuance of due refunds, widening of tax base, countering tax evasion and avoidance, recovery of arrears, voluntary compliance, reform process and what not!

It is an incontrovertible fact that FBR ruthlessly wasted borrowed funds of millions of dollars under Tax Administrative Reforms Programme (TARP) and Pakistan Raise Revenue (PRR) Project, but could not induce/compel 20 million potential income taxpayers to file declarations voluntarily.

In its ‘Annual Performance Report (2023-24)’ [for fiscal year (FY) 2024-25 it has not been released as yet], FBR claimed total income tax registration of 13,446,015 as on June 30, 2024, whereas active taxpayers during the fiscal year 2023-24 were only 4,738,595! Even as on November 18, 2025 [at the time of writing these lines], the total number of active income taxpayers at the website of FBR was less than 7 million.

The gap of non-filers, as per own data of FBR, is still over 6 million!!

It may be recalled that on October 16, 2024, Rashid Mahmood Langrial, the incumbent Chairman FBR, claimed that the total registered taxpayers in Pakistan were only four million! He authored the introduction to ‘Annual Performance Report (2023-24)’ wherein it is claimed that total number of registered income taxpayers as on June 30, 2024 across Pakistan reached 13.466 million with 3,574,269 new taxpayers added during the year [Table 6 of ‘Annual Performance Report (2023-24)’].

One wonders how the Chairman FBR missed such huge numbers of income taxpayers and those registered as per own claim of FBR in his address before the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) in Karachi on October 16, 2024!

Strangely, while giving a briefing before the Standing Committee of Senate on December 26, 2024, he once again claimed that only 5-10 percent of Pakistanis would be affected by ‘The Tax Laws (Amendment) Bill, 2024’, presented in the National Assembly on December 18, 2024 that entails many unconstitutional provisions and was dropped.

Unfortunately, in his various addresses, the Chairman FBR has been alleging that “90 percent of Pakistan’s population does not pay taxes”. Periodic statements by Langrial contradict even facts highlighted in various official publications of FBR, namely, ‘Annual Performance Report (2023-24)’ and ‘Revenue Division 2025 Year Book’.

The Chairman FBR in his briefing before the Senate’s Standing Committee failed to point out that majority of non-filers are from the higher echelons of society, including more than 50 percent government employees, including officers/officials of FBR, enjoying taxable income and hundreds of elected members of parliaments.

FBR has not only failed to tap the actual tax potential of Rs 34 trillion (17 percent of GDP, if informal economy is also included), but is also guilty of shifting the tax burden from the rich onto the poorer segments of society, especially middle-class salaried employees. It is serving and protecting the interests of ruling elite—indomitable militro-judicial-civil complex, corrupt politicians and greedy businessmen and tax evaders/avoiders.

Let us again try to determine a rational income tax base of Pakistan. According to 2023 official census, our population was 241,499,431, which through live monitoring (November 18, 2025 at 12:45 pm) was 256,751,066. Dependent population of children under the age of 16 years is around 35 percent while 4 percent people are above 65 years.

Out of total population, 120 million are below poverty line earning less than two dollars a day. Our employed labour force out of total force of around 85 million as per various estimates and Economic Survey of Pakistan 2025 is around 70 million. Out of it 48.5 percent are based in rural areas that earned below taxable income or agricultural income falling outside the ambit of Income Tax Ordinance, 2001.

Analysing all the above figures (juxtaposed), individuals liable to file tax returns for tax year 2025 could not have been more than 20 million.

However, 120 million unique mobile users [total subscribers as on September 30, 2025 were 196 million] paid 15 percent advance/adjustable income tax, though return filers as per FBR’s Active Taxpayers’ List as on November 18, 2025 remained 4.32 million (only around two million showing any taxable income!!) The figure last year as on June 30, 2024 was 4.74 million.

Hence, there is a decrease and not increase in the number of individual income tax filers!

According to Pakistan Telecommunication Authority (PTA), accessed on November 18, 2025, the total cellular/broadband subscribers as on September 30, 2025 were 196 million (78.98 percent mobile density), 148 million mobile broadband subscribers (59.60 percent mobile broadband penetration), 3 million fixed telephone subscribers (1.06 fixed teledensity) and 152 million broadband subscribers (61.17 percent broadband penetration).

The above figures prove beyond any doubt that since July 1, 2023, the entire taxable population and even those having no income or income below taxable limit are paying paying tax under section 236 of the Income Tax Ordinance, 2001.

The rate of this advance and adjustable tax is 15 percent as filers, and 75 percent in case of those mentioned in general order issued under section 114B of the Income Tax Ordinance, 2001, being prepaid or postpaid mobile/broadband/internet users.

All adults in Pakistan having bio-metrically verified mobile connections were/are paying advance income tax, whether they earn taxable income or not! If all of them file returns, not less than 100 million will be entitled to refunds.

However, it is also disturbing to note that until November 18, 2025 at 13:30 hours (at the time of writing this article), total number of persons (natural and legal) showing any taxable income is as low as three million out of total 6,532,793 (4,322,788 individuals and 2,210,005 non-individuals) active income taxpayers at the website of FBR!

It is about time FBR published and made available on its website the data of income tax filers and how much tax was received in tax year 2025 along with returns from new filers.

It should also explain why 4.74 million active taxpayers during the fiscal year 2024 dropped to 4.32 million in 2025, whereas the total registered income tax persons, as per its own ‘Annual Performance Report’ for year ending June 30, 2024, were 13.466 million! Needless to emphasise that it is FBR’s obligation under Article 19A of the Constitution, which reads: “Every citizen shall have the right to have access to information in all matters of public importance subject to regulation and reasonable restrictions imposed by law”.

The latest data published by FBR or available online transpire that only a fraction of entire income taxpayers’ population filed returns for the tax year 2024 and 2025.

The FBR has admitted in ‘Revenue Division Year Book 2025’ that millions of citizens paid advance income tax of Rs 3.38 trillion (59 percent of total income tax collection during FY 2025) under various withholding provisions (more than 60 are in operation) under the Income Tax Ordinance, 2001.

It is claimed in ‘Annual Performance Report (2023-24)’ that during the fiscal year (FY) 2024, field formations succeeded in registering 4,738,595 new income taxpayers! How come that out of 13,446,015 total registered income taxpayers as on June 30, 2024, only 4.74 million were on active taxpayers’ list (ATL), and this number even on the mid-day of November 18, 2025, at the time of writing these lines, was only 6,532,793! The huge gap of 6,913,222 in income tax return filers and registered taxpayers as per FBR’s own data and 13 million as per potential income taxpayers requires Chairman FBR’s immediate attention as well as that of Federal Minister for Finance and Revenue and State Minister for Finance & Revenue.

FBR needs soul-searching in the light of the above data. It must place on its website data related to judges, generals and high-ranking civil servants showing how much tax was paid with returns in the last ten years, along with value of taxable perquisites and benefits in kind—claimed exempt under any specific provision of law. The nation has a right under Article 19A of the Constitution to know how much tax was paid by the rich 1 percent of Pakistanis—judges, generals, bureaucrats, parliamentarians, politicians, professionals, industrialists and traders, during the last 20 years.

Nearly 120 million persons are paying income tax at source, but the rich and mighty are not paying taxes on their enormous incomes and assets and on the principle of ‘ability to pay’. Our tax base is distorted and punctured—the system protects tax avoiders and plunderers of national wealth besides forgoing revenues of billions of rupees through exemptions, amnesties, concessions and immunities—most of the time using the wicked device of SROs (statutory regulatory orders).

For remedial measures, comprehensive roadmap [Towards Broad, Flat, Low-rate and Predictable Taxes (PRIME Institute, October 2024)] exists but elected members in Parliament have no time to fix the oppressive and anti-growth tax system and give relief to the masses. Their priorities are how to protect self-interests and keep on weakening the democratic institutions by mutilating the Constitution.

Copyright Business Recorder, 2025