FBR unveils report: FY24 tax expenditure estimated at Rs2.43trn

ISLAMABAD: The total federal tax expenditure for the fiscal year 2023–24 has been estimated at Rs 2,434.73 billion, according to the Tax Expenditure Report (2025) issued by the FBR on Monday.

The report revealed that the total federal tax expenditure constitutes 26.18% of the FBR’s total tax collection for FY 2023-24, marking a significant decrease from 54.15% recorded in the previous fiscal year.

In terms of economic size, the total tax expenditure represents approximately 2.32% of GDP during fiscal year (2023-24), compared to 4.6% of GDP in the previous fiscal year.

According to the report, the amount of Rs 2,434.73 billion is equivalent to 26.18% of the Federal Board of Revenue’s (FBR) total tax collection (FY 2023-24 Rs. 9,299.08 billion) or 2.32% of the country’s Gross Domestic Product (GDP) FY 2023-24 Rs. 105,143 billion.

This figure reflects the revenue foregone by the government due to various tax exemptions, concessions, and preferential treatments across different tax regimes.

It is important to emphasize that the figures presented in this report are estimates and should not be interpreted to be meant that eliminating a given tax expenditure would result in an equivalent increase in government revenue. The actual fiscal impact of removing tax exemptions depends on several economic factors, including the nature of the activity affected, the responsiveness of taxpayers (elasticity), and prevailing market conditions. Additionally, this report does not cover any spillover effects that FBR tax expenditures might have on provincial tax systems.

By offering a transparent overview of the revenue foregone through various tax provisions, this report aims to support evidence-based policy decisions and foster a more informed public debate on the structure and equity of the federal tax system in Pakistan.

Overview of Federal Tax Expenditures (FY 2023–24) revealed that Income Tax Estimated Expenditure amounted to Rs. 545.23 billion. This is equivalent to 5.86% of the Federal Board of Revenue’s (FBR) total tax collection or 22.39% of the overall tax expenditure or 0.52% of the country’s Gross Domestic Product (GDP).

In case of Sales Tax, the estimated expenditure totaled at Rs. 1,237.11 billion. This is equivalent to 13.30% of FBR’s total collection or 50.81% of the total tax expenditure or 1.18% of GDP.

In case of customs duty, the estimated expenditure amounted to Rs. 652.39 billion. This is equivalent to 7.02% of FBR’s total tax collection or 26.80% of the overall tax expenditure or 0.62% of GDP.

Copyright Business Recorder, 2025