Prime Minister’s Office Announces Increase in Income Tax Revenue
The Prime Minister’s Office announced on Wednesday a substantial rise in income tax contributions from the retail sector during the fiscal year 2024-25. According to the statement, the retail sector paid an additional Rs. 455 billion in income tax, leading to a total collection of Rs. 617 billion. This announcement reflects the government’s ongoing focus on expanding the tax base and generating higher revenue from key economic segments, particularly the retail sector, which has historically been under-taxed.
The Federal Board of Revenue (FBR), responsible for tax administration in Pakistan, provided a detailed breakdown of these collections. Their data indicates that while the total tax collection from the retail sector reached Rs. 617 billion, the actual increase compared to the previous fiscal year is Rs. 133 billion. This figure provides a more accurate picture of year-on-year growth, as it takes into account a broader definition of the retail sector, including wholesalers and traders.
FBR’s Breakdown of Tax Contributions in FY2024-25
The FBR’s breakdown of the total Rs. 617 billion collected highlights the various channels through which income tax was obtained from the retail sector. The largest portion, Rs. 316 billion, comes from advance income tax payments, a system designed to ensure timely tax collection from businesses. Of this advance tax, Rs. 237 billion was specifically contributed by retailers. Wholesalers and traders accounted for Rs. 30 billion and Rs. 49 billion respectively, showing their significant participation in the overall tax ecosystem.
In addition to advance tax, the FBR reported Rs. 28 billion collected through admitted income tax in annual returns, an indicator of voluntary compliance by businesses. Withholding taxes, which are deducted at the source on various transactions, contributed another Rs. 216 billion. Other forms of taxes, including miscellaneous collections, added Rs. 57 billion to the total figure. Compared to FY24, when the broader retail sector paid Rs. 484 billion, this year’s Rs. 617 billion marks steady progress, although it falls short of the government’s ambitious targets.
Government Pushes for Tax Reforms and Digitisation
During a high-level meeting focused on FBR reforms, Prime Minister Shehbaz Sharif was briefed on the recent tax collection performance. He was informed that the country’s tax-to-GDP ratio had risen by 1.5 percentage points in FY25. Despite this improvement, the figure still lags behind the International Monetary Fund’s (IMF) target of 10.6 percent, underscoring the need for continued reforms and stronger enforcement.
Responding to these developments, the Prime Minister directed the FBR to intensify its digitisation efforts, enhance enforcement capabilities, and engage with key stakeholders to address compliance gaps. He emphasized that broad-based consultations with businesses, trade bodies, and relevant government agencies are essential for ensuring a transparent and effective tax system.
One of the most notable achievements highlighted during the meeting was the surge in return filers, which jumped from 4.5 million in 2024 to 7.2 million by June 2025. This increase suggests greater public awareness and a more proactive approach towards fulfilling tax obligations. The FBR also reported notable improvements in the customs clearance system, with initiatives underway to reduce the average clearance time from 52 hours to just 12 hours within the next three months. Such measures are expected to facilitate smoother trade, reduce bottlenecks, and further improve compliance among importers and exporters.
