Direct Taxes Surge: Direct taxes increased by 38.5%, totaling Rs4,531 billion.
Sales Tax Growth: Sales tax collections reached Rs3,087 billion, up by 33.2%.
Karachi at the Top: Karachi’s LTO accounted for 30.7% of total tax revenue. January 09, 2025
Karachi continues to lead the nation’s tax landscape, with the city’s Large Taxpayer Office (LTO) contributing a commanding 30.7% of Pakistan’s total tax revenue in 2023-2024. This robust performance underscores Karachi’s critical role in the country’s financial ecosystem, with its contributions across income tax, sales tax, customs duties, and federal excise duties setting the pace.
The Federal Board of Revenue (FBR) Year Book for 2023-2024 has highlighted key milestones, from a substantial increase in direct tax collections to significant growth in withholding tax and sales tax sectors.
In terms of tax distribution, indirect taxes made up 51.3% of the total revenue, while direct taxes, including withholding taxes, comprised 48.7%. Direct taxes surged to Rs4,531 billion, a remarkable 38.5% increase from Rs3,271 billion in the previous fiscal year. Refunds totaling Rs52 billion were issued during the same period, reflecting the efficiency of the system.
Key direct tax sources include income tax, workers’ welfare funds, workers’ profit participation funds, and capital value tax. Notably, withholding taxes, advance taxes, payments with returns, and collections on demand contribute significantly to income tax revenue.
A standout feature of the fiscal year was the 57% rise in advance tax collections, which jumped from Rs975 billion to Rs1,530 billion. Payments with returns grew by 35.8%, totaling Rs162 billion compared to Rs119 billion the previous year.
Withholding tax (WHT) collections also saw a sharp increase of 36.5%, reaching Rs2,740 billion, up from Rs2,007 billion. WHT from dividends recorded the highest growth at 69.9%, followed by impressive gains in technical fees, bank interest & securities, salaries, and sales of immovable property.
Sales tax collections in FY2023-24 totaled Rs3,087 billion, a growth of Rs495 billion from the previous fiscal year, accounting for 33.2% of the total tax revenue. Sales tax collected at the import stage rose by 17.0%, while domestic sales tax grew by 22.6%.
Karachi’s contribution to domestic sales tax (STD) was substantial, with electrical energy becoming the largest contributor, accounting for 22.5% of the total revenue due to rising power tariffs. The revenue from POL products, however, dropped from 11.9% to 9%.
Sales tax on imports (STM) amounted to Rs1,863.9 billion, a growth of 17% from Rs1,593.5 billion in FY2022-23. Customs duty collections grew by 18.5%, reaching Rs1,104.1 billion and contributing around 12% to total FBR revenues.
The federal excise duty (FED) collection surged by 56.1%, rising from Rs369.9 billion in FY2022-23 to Rs577.4 billion in FY2024, increasing its contribution from 5.2% to 6.2%. Major sectors contributing to FED revenue included cigarettes, cement, beverages/foods concentrates, and air travel, all showing positive growth, with the exception of motor cars and concentrates.