FY2024-25: Total federal tax expenditure estimated at Rs2352.81bn

ISLAMABAD: The total federal tax expenditure for the fiscal year 2024-25 has been estimated at Rs2,352.81 billion, which is equivalent to 20.04 percent of the Federal Board of Revenue’s (FBR) total tax collection.

According to the Tax Expenditure Report 2026 issued on Wednesday, the total federal tax expenditure for 2024-25 is accordingly estimated at Rs2,352.81 billion, equivalent to 2.07 percent of the Gross Domestic Product (GDP), compared to a reported figure of Rs2,434.73 billion in the prior year. The reduction reflects methodological precision and a more accurate measure of the revenue that the Government genuinely foregoes through preferential tax treatment.

The cost of tax exemption is equivalent to 2.07 percent of the country’s Gross Domestic Product (GDP) (GDP Nominal FY 2024-25: Rs113,934.97 billion).

This figure reflects the revenue foregone by the government due to tax exemptions, concessions, and preferential treatments that represent genuine departures from the benchmark tax system.

The total federal tax expenditure constitutes 20.04 percent of FBR’s total tax collection for FY 2024-25, a decrease from 26.18 percent recorded in the previous fiscal year (FY 2023-24). The decline reflects the application of a refined benchmark methodology, consistent with international best practice, that more precisely defines the boundary between structural features of the tax system and policy-driven departures from it.

In terms of economic size, the total tax expenditure represents 2.07 percent of GDP during 2024-25, compared to 2.32 percent of GDP in the previous fiscal year, positioning Pakistan broadly in line with the lower range of comparable developing economies whose average stands at 2.31 percent (Global Tax Expenditure Database, 2025).

Copyright Business Recorder, 2026