Pakistan’s Tax Filings Expose Major Income Disparities
Pakistan’s tax data reveals a significant gap—millions file returns, yet many report little to no taxable income. Out of 5.9 million tax returns, a staggering 43.3% declared zero taxable income, while only 3,651 individuals reported earnings exceeding Rs100 million. This highlights the country’s narrow tax base and raises concerns about tax compliance.
Few High Earners, Widespread Low Declarations
Exclusive data obtained by The News shows that high-income earners are extremely rare, with only a few thousand individuals reporting taxable incomes above Rs100 million in the latest filings.
Federal Board of Revenue (FBR) Chairman Rashid Mehmood Langrial recently told a National Assembly sub-panel:
“Only 12 individuals declared wealth exceeding Rs10 billion in their tax filings.”
This raises two key possibilities:
- Massive tax evasion at the upper-income levels
- A genuine lack of ultra-wealthy individuals in the country
Breakdown of Tax Filers (2024-25)
The total number of tax filers for the current fiscal year stands at 5.9 million, categorized as:
- Individuals: 5.8 million
- Business partnerships (AOPs): 104,269
- Companies: 87,900
Comparatively, tax filers stood at 6.8 million in 2023 and 6.3 million in 2022, far below the estimated 15 million potential filers.
A particularly worrying statistic:
Pakistan has over 300,000 industrial electricity connections, yet only 87,000 companies filed tax returns.
Zero Taxable Income & FBR’s Response
- Out of 5.9 million tax filers, 2.6 million declared zero taxable income.
- Due to this high number, the FBR is scrapping the ‘non-filer’ category.
- Instead, new classifications—“eligible” and “ineligible”—will be introduced for major transactions, such as:
- Buying property worth over Rs10 million
- Purchasing a new car
Taxpayer Distribution by Income Bracket
- 272,112 filers: Income up to Rs400,000
- 187,741 filers: Rs400,000 – Rs500,000
- 484,517 filers: Rs500,000 – Rs600,000
- 514,461 filers: Rs600,000 – Rs700,000
- 1.3 million filers: Rs1 million – Rs5 million
- 97,326 filers: Rs5 million – Rs10 million
- 49,359 filers: Rs10 million – Rs50 million
- 4,370 filers: Rs50 million – Rs100 million
- 3,651 filers: Over Rs100 million
The Bigger Picture
Despite a declared income exceeding Rs10 trillion, the total tax collected stood at only Rs2.9 trillion. This further underscores Pakistan’s deep-rooted tax collection challenges and the need for stricter enforcement measures.