Karachi, October 15, 2024 – The latest figures released by the Federal Board of Revenue (FBR) have brought to light a concerning rise in nil-filers, representing a significant portion of income tax returns filed for the tax year 2024.
According to the FBR’s data, out of the 4.436 million income tax returns submitted, a staggering 1.636 million, or 37%, were nil-filers. These returns, marked by zero taxable income, contributed no tax revenue to the national treasury.
This notable increase in nil-filers demonstrates a growing trend of individuals and entities filing income tax returns without declaring any taxable income. In comparison to the previous year, when 778,137 individuals filed nil-returns, constituting 36% of the total 2.166 million returns filed by mid-October 2023, the surge is evident. Over the entirety of the 2023 tax period, the total number of returns stood at 6.4 million.
The FBR has expressed concern over the escalating number of nil-filers, as this trend undermines the revenue collection efforts of the government. Despite the increase in the number of returns filed, the number of contributors to the tax pool remains disproportionately low. The trend not only exacerbates fiscal pressures but also raises questions about tax compliance and enforcement in the country.
While the surge in nil-filers is alarming, the FBR has also reported a substantial increase in tax revenue collected during the current year. For tax year 2024, the revenue body collected Rs. 114 billion alongside the 4.436 million returns filed, more than double the Rs. 52 billion collected during the previous tax year. This growth in tax collection, although significant, is overshadowed by the parallel rise in nil-filers, raising concerns about the effectiveness of the tax net expansion.
The FBR’s registration data further highlights this issue. Between July 1, 2023, and the present, a total of 1,035,922 individuals registered with the FBR, out of which 622,102 were nil-filers. In addition, from July 1, 2024, onwards, 450,405 new taxpayers were registered, of whom 307,482 filed nil-income returns.
This growing segment of nil-filers underscores the challenges faced by the FBR in expanding the tax base while ensuring compliance. Without significant policy reforms and stronger enforcement measures, the burgeoning number of nil-filers threatens to compromise the government’s ability to meet its revenue targets, potentially impacting public services and infrastructure development. The FBR’s response to this trend will be pivotal in determining the future of tax collection in Pakistan.