Experts Predict Rs 90 Billion in Losses Due to Relaxation in Income Taxes

The government of Pakistan has announced a tax scheme that will benefit the super-rich further weakening the already crippled economy.

According to the financial experts, the reduced tax rates will put a dent of Rs 90 billion to the national exchequer. Apart from that, around 521,000 taxpayers will also slide off from the tax net as per FBR’s analysis. According to the new policy, both salaried and non-salaried individuals will pay a maximum of 15% income tax as compared to the maximum 35% they used to pay before this policy.

The limit for exemption from income tax has been raised to Rs 1.2 million per year, up from Rs 400,000. Many experts are deeming the move as a pre-poll rigging attempt by the government to gather more votes in the upcoming national elections.

Many see the tax cuts as a win for the public, however, the national exchequer seems to be losing a significant chunk of money.


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Pakistan’s Tax Net

The government has taken several initiatives to broaden the tax base of Pakistan. These include tax amnesty schemes, doubling the salaries of taxpayers etc. However, these schemes have failed to yield considerable results as Pakistan still has the lowest number of active taxpayers per tax administrator in South Asia. To draw a comparison, take a look at Pakistan’s and some other countries’ numbers;

Pakistan: 64 active taxpayers per tax administrator.

Switzerland: 3,182 active taxpayers per tax administrator.

The United States of America: 1,990 active taxpayers per tax administrator.

India: 537 active taxpayers per tax administrator.

Sri Lanka: 232 active taxpayers per tax administrator.


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Pakistan also has one of the lowest taxpaying individuals ratios in terms of total population in the world. Here is how it stands;

  • 0.4% of the total population of Pakistan pays taxes.
  • 4.7% of the total population of India pays taxes.
  • 58% of the total population of France pays taxes.
  • 80%  of the total population of Canada pays taxes.

Pakistan relies mostly on withholding taxes, which are treated internationally as indirect taxes. Withholding taxes in Pakistan make up 68% of the total income taxes. Currently the direct to total taxes ratio stands at 38% as compared to the 70% ratio in most OCED countries. Experts are projecting that Pakistan’s direct tax ratios will shrink down to a low 13% once the withholding tax is treated as an indirect tax. A tax official added;

The outcome of the economic package will bring down the overall ratio further.

You can read in detail about the revised income tax regulations and payable taxes here.


  • Carl

    this loss is bearable. 90billion sey ziyada ki to har saal corruption hi ho jati hey, wo loss nazar nahin araha..
    already its collected from indirectly by different names like, FED, GST, SST, WHT etc.
    when the tax already deducted from our income then why public pay indirect taxes.

  • Leo

    When you say “According to experts,,,,, ” it definitely means the opposing side and this fact is further strengthened by the sentence as “Many experts are deeming the move as a pre-poll rigging,,,”. So these are the comments of the opposition, who by definition will “OPPOSE”. Tell me of your honest opinion do you pay taxes ? And if so,,, arent you happy with this move ???

    • Ali Salman

      Hahahaha I laughed so loud reading last line.

      Those who pay taxes will be happy over it and those who don’t wont be. So who we should listen to :)

      Our problem is that mostly so called “experts” have affiliation and are not neutral.

      • Leo

        I agree with you about the so called “Experts” being biased. There are always two sides to a story and as of late Pro-Pak is bent on highlighting the negativity of each step taken by the Govt.

  • TiredOfThisShit

    “Pakistan also has one of the lowest taxpaying individuals ratios in
    terms of total population in the world. Here is how it stands;
    0.4% of the total population of Pakistan pays taxes.”

    Every Pakistani pays taxes on phone, water, electricity, gas bills. Considering how many Pakistanis use these basic facilities, the actual taxpayer count is much much higher.

    Salaried class or those inside documented/paper economy get screwed twice; once via taxation on income and then via indirect taxation on everything purchased with the remaining income on which tax has already been paid.

    And further, what is 90 billion to Ahad Cheema’s 1800 billion plus in corruption on behalf of Showbaz and ilk?