Karachi has emerged as the largest contributor to Pakistan’s national tax revenues for the fiscal year 2023-24, according to the Federal Board of Revenue’s (FBR) annual report. The city’s Large Tax Office (LTO) collected an impressive Rs. 2.522 trillion in taxes, including Rs. 1.36 trillion in income tax, Rs. 136.3 million in federal excise duty, and over Rs. 1 trillion in sales tax.

The Lahore LTO ranked second, generating Rs. 1.402 trillion in tax revenues, while the Islamabad LTO secured the third spot with contributions totaling Rs. 1.164 trillion during the same period.

Despite the strong performance in FY24, the ongoing fiscal year 2024-25 has presented significant challenges for the FBR. The tax authority is struggling to meet its ambitious revenue collection targets, with a massive shortfall of Rs. 386 billion recorded in the first six months of FY25. During this period, the FBR collected Rs. 5,623 billion, falling short of the assigned target of Rs. 6,009 billion.

The government had set an ambitious tax collection target of Rs. 12,913 billion for FY25, representing a 40% increase from FY24. However, achieving this goal now appears increasingly difficult given the current shortfall and the challenges faced by the tax machinery.