According to the official tax report presented to the Federal Cabinet by the Federal Board of Revenue (FBR), only 2.63 million individuals and businesses submitted their tax returns during FY 2017-18.
Of those, 1.13 million are salaried and 1.4 million are non-salaried individuals. 43,191 companies and 62,950 associations of persons also filed their tax returns in 2018.
Around 1.55 million or 2 out of 3 Pakistanis out of the 2.53 million individual tax filers declared an annual income less than Rs. 500,000 – Rs. 41,666 per month.
FBR collected Rs. 313 billion from these 2.53 million salaried and non-salaried individuals.
Of the 43,191 companies, 84% or 36,193 disclosed annual income less than Rs. 500,000. FBR collected Rs. 496 billion from these companies.
Out of 62,950 associations of persons, 75% or 47,287 declared annual income less than Rs. 500,000. FBR collected Rs. 78 billion from these associations.
Tax contribution by each sector
The FBR document has revealed that financial and insurance, mining, and construction sectors paid more taxes than their shares in the GDP.
The share of the financial and insurance sector in the GDP was 3.4% and its contribution to the total direct taxes remained at 5.7%. The mining sector had a 2.9% share in the GDP and contributed 3.5% of the total direct taxes. The construction sector had a 2.8% share in the GDP and contributed 4% of the total direct taxes.
On the other hand, the manufacturing sector paid tax almost equal to its share in the economy, contrary to the widespread perception of it being the highest tax-paying sector.
In 2018, the manufacturing sector’s share in the economy was 13.5% and its contribution to the total direct taxes remained at 13.49%.
The share in GDP of the wholesale and retail sector was 18.9% but paid only 3.8% of the total direct taxes. Similarly, the transport and communication sector had a 12.9% share in the GDP but paid 1.7% of the total direct taxes.
Surprisingly, the agriculture sector contributed 0.33% of the total direct taxes despite having a 19% share in the GDP.
In absolute terms, the banking sector paid Rs. 71.8 billion in taxes, the most by any sector in 2018, followed by petroleum and services sectors which paid Rs. 66.2 billion and Rs.64 billion respectively.
In 2018, the food sector paid Rs. 33.8 billion in taxes, textile sector Rs. 25.8 billion, auto sector Rs. 25.5 billion, telecom sector Rs. 20.8 billion, oil and gas sector Rs. 19 billion, pharmaceutical sector Rs. 18 billion, iron and steel sector Rs. 12.8 billion, power sector Rs. 11 billion, cement sector Rs. 10.2 billion, chemical sector Rs. 10.1 billion, construction sector Rs. 7 billion, beverage sector Rs. 6.7 billion, tobacco sector Rs. 5.2 billion, and sugar sector Rs. 2.5 billion.