Islamabad: The Prime Minister’s Office on Wednesday credited Pakistan’s digital tax initiatives—particularly the integration of point-of-sale (POS) systems and stricter enforcement measures—for driving a substantial increase of PKR 455 billion in income tax collection from the retail sector during the fiscal year 2024-25.
According to official figures, the total income tax paid by the retail sector reached PKR 617 billion, a significant leap from previous years. This includes PKR 316 billion collected in quarterly advance taxes from wholesalers, retailers, and traders.
The announcement followed a high-level review meeting chaired by Prime Minister Shehbaz Sharif, where the government’s ongoing tax reforms and digital transformation of the Federal Board of Revenue (FBR) were assessed. The Prime Minister emphasized the need to accelerate efforts toward building a digitized and facilitative tax system, stating that digitalization is essential to broadening the tax base and reducing dependence on indirect taxation.
However, senior officials within the FBR raised internal concerns regarding the classification of the “retail sector.” They noted that the current, broad definition includes wholesalers, traders, and even some corporate sector firms—potentially inflating the reported contribution from retail alone.
Despite these definitional ambiguities, the FBR acknowledged a historic expansion in the taxpayer base. The number of income tax return filers jumped from 4.5 million in 2024 to over 7.2 million by June 2025, reflecting growing compliance as digital enforcement gains traction.
The FBR also confirmed that Pakistan’s tax-to-GDP ratio increased by 1.5% in FY25, a record gain, although it still fell short of the International Monetary Fund (IMF) target of 10.6%. Officials attributed this gap to structural weaknesses and ongoing challenges in the informal economy.
Additional reforms were also discussed during the meeting, including improvements in the faceless customs clearance system, which is expected to reduce average clearance times from 52 hours to just 12 hours in the next three months. The move is projected to enhance transparency, cut procedural delays, and boost revenue generation from international trade.
The Prime Minister’s Office reiterated that the government’s tax policy overhaul aims to strike a balance—raising national revenue while reducing the burden on ordinary citizens. PM Shehbaz Sharif stressed that long-term success depends on curbing informal sector activity and ensuring that all economic segments contribute their fair share.
The digital reforms, combined with targeted enforcement, appear to be paying off—but the government faces ongoing pressure to institutionalize these gains, meet international benchmarks, and ensure equitable taxation across the economy.
Samra Zulfiqar, a real estate analyst at Zameen.com, is passionate about finding projects that offer buyers the best returns. Her keen insights spotlight the market’s most promising opportunities.
