Karachi, May 31, 2025 – The Institute of Chartered Accountants of Pakistan (ICAP) has urged the Federal Board of Revenue (FBR) to intensify monitoring of high-value banking transactions as a core strategy for the broadening of the tax base.
The proposal comes as part of ICAP’s comprehensive tax recommendations for the 2025–26 federal budget.
According to ICAP, Pakistan’s population is projected at around 255 million in 2025, yet only 4.9 million individuals filed income tax returns for the year 2024. This glaring gap highlights the urgent need for broadening the tax net. Key barriers identified include public mistrust in the tax system, underutilization of data, and limited institutional capacity within FBR.
In its proposals, ICAP stressed the need for a data-driven approach, especially focusing on high-value transactions in real estate, vehicle purchases, and luxury spending. One of the main suggestions includes assigning trained personnel to analyze financial data, supported by the mandatory use of CNICs for large transactions. This data, ICAP argues, remains an untapped goldmine that could significantly support broadening the tax base if used effectively.
ICAP further emphasized the importance of monitoring banking activity. The institute recommended the formation of dedicated teams—either newly hired or outsourced professionals—to conduct real-time scrutiny of large deposits, withdrawals, and fund transfers. This initiative is aimed at flagging individuals living beyond their declared means and bringing them into the tax net.
Additionally, ICAP proposed lifestyle audits to identify high-spending individuals not currently on the FBR’s radar. These include people paying for premium education, private healthcare, and exclusive club memberships—activities that can signal hidden income streams and potential tax evasion.
To ensure long-term success, ICAP’s proposal outlines supportive measures such as offering incentives for timely filing, launching digital awareness campaigns, improving online taxpayer services, and implementing anti-corruption reforms within the tax machinery. The aim is to rebuild public confidence and create a fair, transparent, and efficient tax regime.
By adopting ICAP’s recommendations, the FBR can take decisive steps toward broadening the tax base, reducing dependency on existing compliant taxpayers, and enhancing national revenue generation in a sustainable manner.