Dr. Ikramul Haq
“The number of active taxpayers during FY 2023-24 highlights a total of 4.74 million active income tax filers and 234,193 sales tax filers across various regions”—Annual Performance Report (2023-24), Federal Board of Revenue (FBR)
“Direct Taxes represent the primary revenue stream for the Federal Board of Revenue (FBR), accounting for approximately 48.7% of the total tax collected in FY2023-24. The net collection amounted to Rs. 4,531 billion, marking a significant increase of 38.5% from the previous fiscal year’s collection of Rs. 3,271 billion”—Revenue Division 2024 Year Book, FBR
According to Pakistan Telecommunication Authority (PTA), accessed on May 23, 2025 at 10:53 hours, the total cellular/broadband subscribers as on March 31, 2025 were 197 million (80.30% mobile density), 143 million mobile broadband subscribers (58.31% mobile broadband penetration), 3 million fixed telephone subscribers (1% fixed teledensity) and 147 million broadband subscribers (59.83% broadband penetration).
It is an irrefutable fact that all adults in Pakistan having bio-metrically verified mobile connections were/are paying 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 May 23, 2025 at 13:26 hours, at the time of writing these lines, total number of persons (natural and legal) showing any substantial taxable income was as low as three million, out of total 6,983,061 filers (4,972,528 individuals and 2,010,533 non-individuals) appearing as active income taxpayers at the website of FBR!
The PTA historic data proves beyond any doubt that with effect from July 1, 2024 when withholding tax rate on mobile/broadband subscribers was enhanced, the entire taxable population and even those having no income or income below taxable limit are paying advance and adjustable income tax, but only a fraction of them are filing income tax returns.
The current rate of withholding tax on mobile/broadband subscribers is 15% as filers, and 75% 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. They have also to pay in addition to advance income tax, 19.5% sales tax on services imposed by provinces and National Assembly in Islamabad Capital Territory (ICT).
The total number of unique mobile users as on June 30, 2024 was not less than 120 million, which, as per latest data of PTA, is 125 million. It means that FBR for tax year 2024 could have found at least 30 million taxable persons from this database alone—all were paying advance/adjustable income tax. The number of individual tax filers on Active Taxpayers List (ATL) is even less than 5% unique mobile users paying advance income tax under section 236 of the Income Tax Ordinance, 2001.
Over a period, our tax system has become rotten, oppressive, unjust and target-oriented. There is a dire need for discussing the philosophical framework, the principles of equity and justice, which should be the main concern of our tax policy and not mere achieving of revenue targets.
Our tax managers are meeting budgetary targets through oppressive taxes, shifting incidence on the poorer segments of society and exempting the rich. They are not tapping the real tax potential that is not less than Rs. 34 trillion at national level alone. The great divide between the poor and the rich is expanding. FBR has proved to be an inefficient and corrupt organisation. Over 95% collection in the last five years was through withholding taxes or advance tax or taxes paid with returns.
On the one hand, we are not collecting taxes according to the established cannons and constitutional principle [Article 3] of ‘capacity to pay’, and on the other, annual targets are fixed to further squeeze the already dried tax base. There is no political will to tax the rich and mighty absentee landlords, big property owners and those who are engaged in wasteful expenditure. Rich absentee landlords conveniently remain outside the tax net, while the poor are paying 18% GST on even a basic commodity like salt, sold under brand names.
It is worth mentioning that when tax was imposed on salt in the colonial era, the visionary leaders of that time staged a revolt against such high-handedness. However, in the post-independence period, our rulers are playing havoc with the economic life of the poorest by levying exorbitant tax on salt and many other everyday eatable commodities sold under brand names, besides enhancing the prices of utilities and petroleum prices beyond the capacity of the income of vast majority of the population. Now our financial wizards, using the name of International Monetary Fund (IMF), purportedly suggesting in the forthcoming Finance Bill 2025 right to impose petroleum levy beyond Rs. 100, which is against the Constitution of Islamic Republic of Pakistan [“the Constitution”] as being non-tax levy it cannot be the part of Money Bill.
Two reports (cited in the beginning) issued by the FBR, the apex revenue authority at federal level, prove beyond any doubt that this body is a an epitome of incompetence, inefficiency, ineffectiveness, corruption, indiscipline and data manipulation. 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 30 million potential income taxpayers to file declarations voluntarily. In its Annual Performance Report (2023-24), FBR has claimed to have total tax population of 13,446,015 as on June 30, 2024, whereas active taxpayers during the fiscal year 2023-24 were only 4,738,595! Even today, as on May 24, 2025, the total number of active income taxpayers is less than 7 million. The gap of non-filers, as per own data of FBR, is over 6 million!!
It may be recalled that on October 16, 2024, Rashid Mahmood Langrial, the incumbent Chairman FBR, having no experience of tax administration and policy, claimed that the total registered taxpayers in Pakistan were only four million!
Mr. Langrial has written (most probably just signed/approved the draft made with a few changes, presented to him), the introduction of Annual Performance Report (2023-24) that claims 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 Mr. Langrial missed such huge numbers in his address before the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) in Karachi on October 16, 2024!
Unfortunately, in his various addresses, Mr. Langrial alleged that “90% of Pakistan’s population does not pay taxes”. This statement is contrary to facts highlighted in these columns frequently and now refuted in two recent FBR’s official publications, namely, Annual Performance Report (2023-24) and Revenue Division 2024 Year Book.
It was highlighted in an article:
The disclosure by the Ministry of Finance before the National Assembly of extracting trillions of rupees as advance adjustable income tax from the mobile users in Pakistan during the last five years may be shocking for many. However, it has been highlighted in these columns time and again that the poorest of the poor in Islamic (sic) Republic of Pakistan are subjected to such terrible and oppressive extraction, while a small number of rich and mighty members of militro-judicial-civil complex enjoy unprecedented tax exemptions, concessions and waivers!
The Chairman FBR in his briefing before the Senate’s Standing Committee failed to emphasize that majority of non-filers are from the higher echelons of society, including more than 50% 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% 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. It is serving and protecting the interests of ruling elite—indomitable militro-judicial-civil complex, corrupt politicians and greedy businessmen and tax evaders/avoiders.
It is time that FBR publishes and makes public on its website, the data of income tax filers and how much tax was received in tax year 2024 along with returns from new filers. It should also explain why only 4.74 million were active taxpayers during the fiscal year 2024, whereas the total registered income tax persons, as per its own annual performance report, were 13.466 million!
Needless to emphasize that above 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 above-referred data published by FBR transpire that only a fraction of entire income taxpayers’ population filed returns for the tax year 2024. FBR has admitted in Revenue Division 2024 Year Book that millions of citizens paid advance income tax of Rs. 2.740 trillion (60% of total income tax collection during FY 2024) under various withholding provisions (more than 65 are in operation).
It is claimed in Annual Performance Report (2023-24) that during the fiscal year 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 May 23, 2025, at the time of writing these lines, was only 6,983,061!
The huge gap of 6,462,954 in income tax return filers and registered taxpayers as per FBR own data and 23 million as per potential income taxpayers requires Chairman FBR’s immediate attention as well as that of Federal Minister for Finance.
Millions of mobile users, dependent on parents, do not earn income. Overwhelming majority paying advance adjustable income tax as mobile users have income below taxable limit of Rs. 600,000. They are not bothered to claim refund of withheld tax by filing tax returns—primarily because filing would cost much more than the amount withheld and secondly, for refund claim one has to file application electronically—for many illiterate Pakistanis, imposition of such conditions by FBR shows its mind-set of highhandedness, which is highly deplorable.
On the contrary, majority of the rich and mighty just pay a fraction of income tax by way of withholding tax on their colossal incomes/wealth. They never bother to file income returns and wealth statements. For the last six tax years 2018 and 2024 (for which notice can be issued under limitation provided in the Income Tax Ordinance, 2001), even many FBR officers, parliamentarians, judges and high-ranking civil-military bureaucrats and their dependents (most income-yielding assets are held in their name or benami) failed to file tax returns and wealth statements!
FBR needs soul searching in the light of above facts and figures. 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% of Pakistanis—judges, generals, bureaucrats, parliamentarians, politicians, professionals, industrialists and traders, during the last 20 years.
The data, cited above and in many other articles, confirm FBR’s ineffectiveness and incompetence. Nearly 125 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—the system protects tax avoiders and plunderers of national wealth, stashing of assets abroad, besides forgoing revenues of over four tillions of rupees through exemptions, amnesties, concessions and immunities—most of the time using the wicked device of SROs (statutory regulatory orders).
Today’s Pakistan represents a state where a trio of corrupt civil-military bureaucrats, incompetent politicians and profit-hungry businessmen is very affluent, but the State is poor. It is relying more and more on borrowed funds—our total external debt and liabilities as on March 31, 2025 touched the monstrous figure of US$ 130.310 billion and internal debt stood at a staggering Rs. 89.834 trillion—the domestic debt is seven folds of total annual revenue of Pakistan, which is simply unsustainable.
The prevalent state of affairs is the direct outcome of the policies of successive regimes—military and civilian alike—to allow a free hand to forces of loot and corruption. Our ruling classes would never want Pakistan to come out of debt enslavement, as it would end their perpetual control over the state and means of production, which they are maintaining as gumashtas of Neo-colonial forces.
For remedial measures, comprehensive roadmap [Towards Broad, Flat, Low-rate and Predictable Taxes (Prime, October 2024)] exists but elected (sic) 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 infighting at the behest of those who possess real power through barrel of gun and believe in subjugating their own people.
The time has come to make a law that those possessing assets (immoveable and moveable) abroad in their own names, dependents or benami exceeding US$ 100,000 should not be allowed to contest any election in Pakistan or hold any public office. Their tax declarations to this effect with the FBR must be shared with Election Commission of Pakistan.
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Dr. Ikramul Haq, Advocate Supreme Court, Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE), holds LLD in tax laws. He was full-time journalist from 1979 to 1984 with Viewpoint and Dawn. He also served Civil Services of Pakistan from 1984 to 1996.