FBR, In a surprising announcement, the Prime Minister’s Office declared on Wednesday that the retail sector contributed an additional Rs455 billion in income tax during fiscal year 2024-25. The claim, based on a briefing by tax authorities, attributes the surge to enhanced point-of-sale integration and stricter enforcement measures by the Federal Board of Revenue (FBR).
According to the official statement, the total income tax collection from the retail sector stood at Rs617 billion, up sharply from Rs484 billion the previous year. The government is touting this as a success of its ongoing digital and enforcement reforms, but experts are questioning the credibility and breakdown of these figures.
Sources from the FBR revealed that Rs316 billion of the reported amount came in the form of quarterly advance income tax, which includes contributions from wholesalers, retailers, and traders. This categorization is raising eyebrows, given the highly informal nature of the retail sector in Pakistan and the loose definitions used by the FBR.
Dissecting the Numbers
An analysis of the data shows:
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Advance Tax:
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Retailers: Rs316 billion
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Traders: Rs49 billion
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Wholesalers: Rs30 billion
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Admitted Income Tax via Annual Returns:
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Traders: Rs14 billion
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Retailers: Rs5.3 billion
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Wholesalers: Rs8.5 billion
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Withholding Taxes on Transactions & Utilities:
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Retailers: Rs69 billion
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Traders: Rs119 billion
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Wholesalers: Rs28 billion
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Other Income Taxes:
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Rs57 billion collectively paid by the three categories
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While the official claim indicates an additional Rs455 billion, applying a more conventional definition of the retail sector places the net increase closer to Rs133 billion, according to FBR sources. This discrepancy highlights the ongoing challenge of accurately assessing tax compliance in Pakistan’s fragmented and largely informal retail economy.
Pakistan Surpasses 7.2 Million Tax Filers Amid FBR Digitisation Reforms
PM’s Push for Reforms
Chairing the high-level meeting, Prime Minister Shehbaz Sharif praised the FBR’s performance but stressed that reforms must lead to a sustainable, digitized, and citizen-friendly tax system. He directed authorities to:
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Accelerate digital transformation
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Enhance enforcement to formalize the economy
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Restructure the digital wing with a time-bound roadmap
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Engage stakeholders, including traders and taxpayers, for better compliance
The PM also emphasized that reforms should reduce the burden on ordinary citizens while broadening the tax base.
Tax-to-GDP Ratio and Filers Surge
The meeting was informed that Pakistan’s tax-to-GDP ratio rose by 1.5% in FY2025, marking a historic increase. However, the FBR still missed the IMF target of reaching 10.6%, despite imposing record tax measures.
The number of income tax return filers jumped from 4.5 million in 2024 to over 7.2 million by June 30, 2025, indicating progress in broadening the tax net.
Additionally, under the newly launched faceless customs clearance system, revenue has increased, and clearance time is projected to drop from 52 hours to 12 hours within three months, further boosting operational efficiency.
Further Links: Pakistan Bureau of Statistics
