ISLAMABAD: The number of individual tax filers in Pakistan doubled to 3.7 million in the outgoing fiscal year 2024–25, with the country’s tax-to-GDP ratio reaching its highest level in five years, according to the Pakistan Economic Survey 2024–25 unveiled on Monday.
Finance Minister Muhammad Aurangzeb, speaking at the launch of the Economic Survey, said the rise in tax compliance and revenue mobilisation was driven by the government’s digital reforms, increased documentation, and a strong focus on high-value taxpayers.
The number of high-value filers in the country surged by 178 percent during the year, according to the Economic Survey 2024-25.
The Finance Minister said that the government has set a medium-term target of raising the tax-to-GDP ratio to 14 percent to support sustainable economic growth.
He credited the progress to technological interventions such as digital invoicing, production tracking, AI-based audits, and a faceless customs regime. “Our tax-to-GDP has hit a five-year high and the Prime Minister is leading this effort personally,” Aurangzeb said.
The survey revealed that Pakistan’s total revenues during the first nine months of FY25 (July 2024 to March 2025) grew by 36.7 percent to reach Rs13,367 billion.
Of this, tax revenues rose by 26.3 percent to Rs9,300.2 billion, while non-tax revenues witnessed a sharp increase of 68 percent, reaching Rs4,229.7 billion.
The Federal Board of Revenue’s (FBR) tax collection matched the overall tax revenue figure.
Strong revenue growth, combined with fiscal discipline, helped reduce the fiscal deficit to 2.6 percent of GDP during the reporting period.
The primary balance posted a surplus of Rs3,468.7 billion, equivalent to 3.0 percent of GDP—reflecting the government’s consolidation efforts.
Reviewing the full fiscal year 2023–24 (July 2023 to June 2024), the Economic Survey noted a significant improvement in fiscal indicators. The fiscal deficit declined to 6.9 percent of GDP in FY24, down from 7.8 percent in FY23 and 7.9 percent in FY22.
The primary balance turned into a surplus of 0.9 percent of GDP, exceeding the target of 0.4 percent.
Similarly, the revenue deficit narrowed to 5.0 percent of GDP from 5.7 percent in the previous year, as revenue growth outpaced current expenditure.
Despite this progress, the government faced challenges in managing spending due to high interest rates.
Markup payments on domestic and foreign debt grew by 45.1 percent and 31.1 percent respectively in FY24, increasing the share of debt servicing in current expenditure to 44 percent, up from 39 percent a year earlier.
Non-markup current expenditure also grew at a higher pace of 19.0 percent in FY24, compared to 5.0 percent in FY23.
However, the government’s strict control over non-interest spending through austerity measures led to the first primary surplus in two decades.
Development spending recorded modest growth. Overall development expenditure rose by 7.1 percent in FY24 compared to a growth of 17.1 percent in FY23.
The federal Public Sector Development Programme (PSDP), including grants to provinces, declined by 1.5 percent following a sharp rise in the previous year.
In contrast, provincial development spending increased by 12.1 percent in FY24, up from 2.0 percent in FY23. The government prioritised infrastructure and social sector projects nearing completion.
Revenue collection remained strong for the second consecutive year. In FY24, total revenues rose by 37.7 percent to 12.6 percent of GDP, compared to 11.5 percent of GDP in FY23.
The increase was largely driven by a 75.4 percent surge in non-tax revenues, supported by higher petroleum levy receipts, State Bank of Pakistan profits, and markups from public sector enterprises.
Tax collection also showed significant improvement. Overall tax revenue increased by 29 percent, reaching 9.6 percent of GDP in FY24, up from 9.3 percent in FY23.
Federal tax revenue grew by 30 percent, while provincial tax collection rose by 19.2 percent. This broad-based improvement reflected effective policy and administrative measures across all tiers of government.
The provinces contributed positively to fiscal outcomes, posting a combined surplus of Rs518.2 billion in FY24, equivalent to 0.5 percent of GDP, compared to Rs154.6 billion or 0.2 percent in FY23.
Punjab led the way with a surplus of Rs212.2 billion, followed by Sindh with Rs137.6 billion, Balochistan with Rs112.3 billion, and Khyber Pakhtunkhwa with Rs56.2 billion.
