FBR's Tax Collection Surges, Embraces Progressive Taxation

The tax collection by the Federal Board of Revenue (FBR) has shown a positive trend during the financial year 2023-24 (July-April) due to effective tax policies and administrative actions. The Economic Survey 2023-24 emphasized the importance of aligning financial systems and digital payments with technological advancements. The FBR is currently undergoing reforms to enhance its efficiency and modernize its operations, with the goal of boosting revenue collection and improving the tax to Gross Domestic Product (GDP) ratio through technological advancements.

During the first ten months of the fiscal year 2023-24, the FBR's net provisional tax collection surged by 30.6 percent to Rs 7,361.9 billion compared to the same period last year. Domestic tax collection also witnessed significant growth, reaching Rs 6,464.3 billion, showing a positive trajectory. Refunds totaling Rs 411.1 billion were issued during this period, ensuring a streamlined tax process. Direct taxes accounted for 48 percent of the total tax collection, indicating a shift towards progressive taxation. The share of indirect taxes decreased to 52 percent, reflecting a balanced tax structure.

Direct tax revenues experienced a notable increase of 39.7 percent during the first ten months of FY 2023-24, with a net collection of Rs 3,513.2 billion. Income tax contributed significantly to the tax revenue, sourced from various channels such as contracts, imports, and profits. This transition towards direct taxes aligns with progressive taxation principles, as highlighted in the Economic Survey, showcasing a positive development in the tax system.

The FBR's efforts to enhance tax collection and modernize its operations have yielded promising results, with a substantial increase in revenue during the fiscal year 2023-24. The focus on direct taxes and progressive taxation principles signifies a step towards a fairer and more efficient tax system. By leveraging technological advancements and implementing effective tax policies, the FBR aims to further improve revenue collection and contribute to the economic growth of the country.