Karachi, November 5, 2024 – The Federal Board of Revenue (FBR) has announced that it must collect an additional Rs 3.61 trillion to achieve its ambitious revenue target of Rs 12.91 trillion for the fiscal year 2024-25. This goal represents a 38.9% increase from last year’s collection of Rs 9.31 trillion, posing a substantial challenge for the revenue authority.
According to the FBR’s report, achieving this target will require considerable increases across multiple tax categories. Direct taxes, which formed a significant portion of last year’s revenue, are set to rise by 19.9%, with the target increasing from Rs 4.53 trillion in FY 2023-24 to Rs 5.43 trillion in FY 2024-25. Sales tax, another major component, will require an even more significant boost of 59.8%, aiming to generate Rs 4.93 trillion this fiscal year compared to Rs 3.08 trillion collected previously.
Federal Excise Duty (FED) and customs duty also have steep growth targets. FED collections are expected to increase by 65.2%, aiming for Rs 953.9 billion in FY 2024-25, compared to Rs 577.5 billion in the previous year. Similarly, customs duty collections must grow by 44.3% to reach Rs 1.59 trillion, up from Rs 1.10 trillion in FY 2023-24.
Reflecting on last year’s performance, the FBR highlighted shifts in its revenue composition. Direct taxes grew in prominence, accounting for 48.7% of total revenue in FY 2023-24, up from 45.7% the previous year. This shift was driven by a significant rise in advance taxes, which increased by 56.9%, and collections on withholding taxes, which rose by 36.5%. The composition of direct taxes has also evolved; the share of advance taxes grew from 29.8% to 33.8%, while withholding taxes saw a slight decrease from 61.4% to 60.5% between FY 2022-23 and FY 2023-24.
Achieving the FY 2024-25 target is expected to present a formidable challenge, given the substantial percentage increases required across all tax categories. FBR officials have indicated plans to enhance tax compliance and broaden the tax base to meet this goal. Additionally, the board has called for stricter measures to combat tax evasion and improve collection efficiency.
However, analysts suggest that the success of these measures will depend heavily on economic stability and the overall growth rate. Some experts have raised concerns about the impact of inflation and a slowing economy on taxpayers, which could pose obstacles to achieving the target. They warn that an excessive reliance on indirect taxes, particularly sales tax, may burden consumers and businesses, potentially affecting economic growth.
In its report, the FBR underscored its commitment to meeting the target, viewing it as essential for funding Pakistan’s development and reducing fiscal deficits. The authority is now under pressure to innovate and implement strategies that could lead to improved collection performance throughout FY 2024-25.
