ISLAMABAD: The Prime Minister’s Office announced on Wednesday that the retail sector contributed an additional Rs455 billion in income tax during the 2024-25 fiscal year, citing the integration of point-of-sale systems and stricter enforcement as key drivers of the increase. The total income tax paid by the retail sector was reported at Rs617 billion, with Rs316 billion collected in quarterly advance taxes from wholesalers, retailers, and traders.
However, sources within the Federal Board of Revenue (FBR) raised concerns about the loose definition of the retail sector, which has led to the inclusion of certain corporate sector firms in the total calculations. The definition, which accounts for multiple categories like wholesalers and traders, has resulted in a significant increase in reported tax contributions.
At a review meeting chaired by Prime Minister Shehbaz Sharif, discussions focused on improving the tax system and ensuring fairness across sectors. The PM emphasized the need for sustained reforms to develop a digitized and facilitative tax system, calling for accelerated digital transformation within the FBR and increased enforcement to curb the informal economy.
FBR officials reported that despite record tax collection, the tax-to-GDP ratio still missed the IMF condition to reach 10.6%, with a historic increase of 1.5% in FY25. The number of income tax return filers surged from 4.5 million in 2024 to over 7.2 million by June 2025, reflecting progress in expanding the taxpayer base.
Furthermore, the FBR outlined improvements in the faceless customs clearance system, which is expected to drastically reduce clearance times from 52 hours to just 12 hours within the next three months, enhancing revenue generation and streamlining processes.
The PM Office reiterated that the tax system’s overhaul aims to balance increasing national revenue while alleviating the burden on ordinary citizens, especially within the informal economy.
