By Sardar Khan Niazi

Pakistan’s rising number of income tax returns has given the government a reason to claim progress in improving tax compliance. The Federal Board of Revenue (FBR) received 6.71 million income tax returns by October 14, 2026, compared with 4.99 million during the corresponding period last year, an increase of 34.38 per cent. The figures are encouraging, but they should not be mistaken for evidence that Pakistan has overcome its longstanding tax problems. The distinction matters because filing a return and paying a meaningful amount of income tax are two different things. An increase in the number of returns may indicate improved documentation, greater awareness of tax obligations or stronger enforcement. It does not, by itself, establish that more people are contributing fairly to public finances or that the government is collecting sufficient revenue from those with the greatest ability to pay. The FBR’s latest figures offer grounds for cautious optimism. Income tax payments accompanying returns reached Rs66.81 billion by October 14, up from Rs58.29bn during the same period last year There is also a question about the quality of the tax base. In December 2025, reports based on official data showed that nearly 39 per cent of returns filed for tax year 2025 declared nil taxable income. This amounted to approximately 2.26 million returns out of 5.91 million. Some zero-tax returns may be legitimate because taxpayers have no taxable income or qualify for deductions. Others may be filed to obtain the benefits associated with appearing on the Active Taxpayer List. The figures therefore warrant scrutiny rather than the assumption that every additional return represents a new, effective taxpayer. (The government’s challenge is not simply to persuade more people to submit forms. It must identify those earning taxable incomes who remain outside the effective tax net, verify declared incomes against available financial information and ensure that the tax liability shown in a return reflects economic reality. This requires reliable data, effective audits and consistent enforcement rather than a system that measures success primarily by the number of forms received Pakistan’s tax problem is also one of fairness. Salaried employees are generally easier to document because their employers deduct tax at source. Their contribution is consequently more visible, while the incomes of some self-employed professionals, traders and other economic actors may be more difficult to assess. Property transactions, business turnover and patterns of consumption can provide useful indicators of potential tax liability, but these must be investigated carefully and translated into lawful, evidence-based assessments The use of tax revenues matters just as much. Citizens are more likely to accept their obligations when public money is spent transparently and public services improve. Weak accountability and the perception that influential groups can avoid obligations undermine the legitimacy of the tax system. The state must demonstrate that compliance is a shared responsibility rather than a burden disproportionately borne by those who are easiest to reach.Ultimately,Pakistan needs to move away from treating the annual filing deadline as the principal measure of tax reform. The more meaningful indicators are sustained growth in net revenue, an increase in taxpayers with genuine taxable incomes, improved compliance across economic sectors and a more equitable distribution of the burden. These outcomes should be measured over time, with transparent data and independent scrutiny. The increase in income tax returns is a welcome development. It may reflect progress in documentation and enforcement, and it should be recognised as such. But a larger number of filers is a starting point, not a final achievement. The government’s real test is whether it can turn this expanded pool of information into a fairer, broader and more productive tax system—one in which the burden is shared more equitably and public finances become less dependent on repeatedly taxing those already within the net.