FBR’s Tax Credit Formula is Absurd & Unfair: Fawad Chaudhry

Federal Minister for Science and Technology, Fawad Chaudhry, has raised objections on the Federal Board of Revenue’s (FBR) tax credit formula and termed it as absurd.

In a Twitter post, the Minister wrote:

FBR’s formula [tax credit] is absurd. Tax credit should go to the districts where factories are established. Factories in Jhelum contribute billions to the national exchequer but tax credit goes to Islamabad/Karachi because of the head offices located there.


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He added that we suffer environmental and infrastructure hazards but tax credit goes elsewhere.

For the unversed, a tax credit is an amount of money that taxpayers can subtract from the income taxes they owe to the government.

A tax credit is normally offered to promote a specific behavior. For instance, a government may grant a tax credit to the auto industry to encourage it to replace gasoline-powered vehicles with EVs.

Recently, the FBR issued the Tax Directory 2018, containing detailed information of all taxpayers during FY 2017-2018.


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A provincial breakdown shows that Sindh contributed 44.91% of the total taxes and was the highest tax-paying province in 2018.

Punjab’s share in the total taxes for 2018 was 34.99% followed by Islamabad Capital Territory (ICT) with 14.77%.

Meanwhile, Khyber Pakhtunkhwa (KP) contributed with 3.54% of the total taxes in 2018, Balochistan with 1.67%, and Gilgit Baltistan with 0.12%.

  • Totally agree with Fawad. There should be a difference in tax generation and deduction. Taxes are deducted in Karachi, but revenue is generated in Punjab. Just imagine that 80 percent of all cars produced in Pakistan are sold in Punjab but their tax revenue is collected in Karachi as their headquarters are situated there.

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