ISLAMABAD – Pakistan’s fragile fiscal system has come under renewed scrutiny after the Auditor General of Pakistan’s 2024-25 report exposed a staggering Rs789.92 billion tax gap, driven by under-collection, concealment, and accounting discrepancies across multiple sectors.
The biggest shortfall was recorded in income tax collections, with losses amounting to Rs480.19bn. Sales tax deficiencies stood at Rs212.12bn, while customs duties contributed Rs40bn to the gap. Federal Excise Duty recorded the smallest shortfall of Rs615m.
The report revealed glaring inconsistencies between revenue figures from the FBR, State Bank of Pakistan, and AGPR, amounting to Rs57bn in discrepancies—an indication of weak fiscal coordination among key financial institutions.
Key losses included:
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Rs167.88bn in under-collected super tax
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Rs149.57bn from inadmissible expense claims
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Rs62.32bn in unrecovered tax demands
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Rs45.39bn in withholding tax shortfalls
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Rs22.87bn in minimum tax losses
Additional gaps were traced to concealed sales, fake invoices, and inadmissible input tax adjustments—leading to Rs123.59bn in sales tax losses. Customs operations also showed inefficiencies, including Rs12.60bn locked in confiscated goods and vehicles, and Rs9.35bn from uncashed financial instruments.
The Auditor General highlighted that weaknesses in tax enforcement, irregular amendments in assessments, and ineffective follow-ups on pending cases had compounded the problem.
The report concluded that Pakistan’s tax administration system is plagued with systemic flaws, demanding urgent reforms in compliance, enforcement, and oversight to safeguard public revenue.
