Pakistan has only 3,651 filers whose taxable income exceeds Rs100m

ISLAMABAD: Pakistan’s tax landscape reveals a stark contrast, despite 5.9 million tax returns filed, a staggering 43.3pc of filers reported zero taxable income (NIL). Moreover, only 3,651 individuals declared taxable income exceeding Rs100 million, highlighting a significant disparity in the country’s tax base.

Official data exclusively available with The News revealed on Tuesday that the numbers of high net worth individuals were not large as only a few thousand possessed a taxable income of over Rs100 million in the latest filed income tax returns during the current fiscal year. The Chairman FBR, Rashid Mehmood Langrial, had recently testified before the National Assembly sub-panel that only 12 people declared wealth of Rs10 billion in their filed tax returns. This data shows either there is massive tax evasion or there are not many numbers possessing higher wealth in the country.

The total number of filers during the current fiscal year 2024-25 stands at 5.9 million, including individual 5.8 million return filers, Association of Persons (AOPS) 104,269 and companies 87,900. The number of filers stood at 6.8 million in 2023 and 6.3 million in 2022 against the potential number of around 15 million filers. There are at least 300,000 industrial electricity connections but the FBR received income tax returns from just 87,000 companies.

Out of the total 5.9 million received income tax returns, there are 2.6 million who declared zero taxable income during the current fiscal year. Keeping in view these whopping numbers, the FBR concluded to scrap the category of non-filers. They are coming up with a category of ‘eligible’ or ‘ineligible’ for allowing substantial transactions such as purchasing property having a value of Rs10 million or buying new cars.

A detailed analysis of the FBR’s received returns showed that there are 2.6 million filers who showed taxable income equal to zero. A breakdown of tax filings shows that 272,112 individuals reported taxable income up to Rs400,000, while 187,741 filers reported income exceeding Rs400,000 but not exceeding Rs500,000. Additionally, 484,517 filers reported income exceeding Rs500,000 but not exceeding Rs600,000, and 514,461 filers reported income exceeding Rs600,000 but not exceeding Rs700,000, revealing a gradual increase in the number of filers as the income bracket rises.

Similarly, only 308,278 filers reported taxable income between Rs700,000 and Rs800,000, while 243,538 filers reported income between Rs800,000 and Rs900,000. Furthermore, 181,131 filers reported income between Rs900,000 and Rs1,000,000. Notably, only 1.3 million filers declared taxable income exceeding Rs1,000,000 but not exceeding Rs5,000,000, highlighting the country’s skewed income distribution and tax base. Only 97,326 filers reported taxable income between Rs5 million and Rs10 million, while a mere 49,359 filers reported income between Rs10 million and Rs50 million. A tiny fraction of just 4,370 filers reported income between Rs50 million and Rs100 million, and a mere 3,651 filers reported income exceeding Rs100 million.

Notably, the total tax filings of 5.9 million individuals possessed a staggering income of over Rs10 trillion, yet the net tax charged stood at Rs2.9 trillion.