FBR reportedly collected approximately Rs13.01 trillion during FY 2025-26, representing around 10.3% of GDP, with Rs6.586 trillion classified as direct taxes.
However, the more important policy question is the composition of those collections.
A significant portion of income tax continues to be collected through withholding taxes, advance taxes, minimum tax regimes and transaction-based collection mechanisms rather than through taxation of net income determined under the normal assessment framework.
A sustainable direct tax system should ideally rely on a broader tax base, taxation according to actual income and ability to pay, effective enforcement, timely refunds and reduced dependence on transaction-based collection.
Accordingly, the success of tax reform should not be measured only by the nominal amount collected. Greater emphasis is equally required on the quality, composition and sustainability of revenue mobilisation.