ISLAMABAD – The Federal Board of Revenue (FBR) has published its analysis of income tax returns for the tax year 2018, shedding light on the categories of taxpayers and their income brackets. The report reveals that the largest number of tax returns were submitted by individuals whose income fell below the taxable threshold.
In the tax year 2018, the income threshold for exemption from tax was set at Rs400,000 for salaried individuals, business individuals, and Associations of Persons (AOPs). According to the FBR’s directory, taxpayers within this exempt income bracket accounted for a substantial portion of total filings.
A detailed breakdown shows that taxpayers earning Rs400,000 or less filed 1 million returns, representing a significant 37% of the total 2.8 million returns submitted for the year. This highlights a key trend: a large number of individuals, while not liable to pay taxes, still actively filed their returns, underscoring a growing culture of compliance within the tax system.
The FBR’s analysis underscores the importance of capturing non-taxable income data to better understand the tax base. Individuals in the non-taxable category often include students, retirees, and low-income earners who are required to file returns to fulfill regulatory requirements or maintain compliance for future transactions.
The data also reflects the need for policy adjustments to broaden the tax net. While the filing of returns by non-taxable individuals is an encouraging sign, it also highlights the limited contribution of higher income brackets to overall tax collection. Policymakers may find this insight valuable in formulating measures to increase tax revenue by ensuring greater compliance among those in taxable income ranges.
The directory provides a comprehensive view of taxpayer behavior and income distribution in Pakistan, marking a step forward in transparency. The FBR has been focusing on increasing documentation within the economy and encouraging voluntary compliance as part of its broader strategy to enhance revenue collection.
The FBR’s detailed directory of tax returns serves as a crucial tool for identifying trends, enabling policymakers to refine strategies to expand the tax base and ensure equitable taxation.
Following image will reveal the contribution of returns by other income slabs:
