ISLAMABAD: The Federal Board of Revenue (FBR) has acknowledged that it cannot fully bridge the Rs3.6 trillion shortfall in sales tax collection due to the highly fragmented and informal nature of Pakistan’s retail sector. The admission was recently conveyed to the Prime Minister’s Office, which was informed that the retail sector alone contributes an estimated Rs310 billion to the overall gap.
Despite these challenges, the FBR claimed it had recovered Rs874 billion in the last fiscal year through enforcement actions, although it has yet to provide a detailed breakdown of this figure. Officials said meaningful recovery is only possible through monitoring at the manufacturing stage and via digital tools to track supply chains and payments. The government is also pursuing digital invoicing, though critics note that allowing large cash deposits as “digital transactions” has undermined this effort.
Sectoral data showed the textile industry accounted for the largest share of the gap at Rs814 billion, followed by petroleum and food at Rs384 billion each. Other major contributors included chemicals and fertilizer (Rs326 billion), iron and steel (Rs200 billion), electronics (Rs193 billion), and beverages (Rs101 billion).
The FBR insisted its enforcement measures raised the tax-to-GDP ratio to 10.24% from 8.8%, keeping Pakistan on track to meet IMF revenue targets.
