Islamabad: The report also highlights that the majority of revenues in Pakistan are collected at the federal level, primarily through indirect taxes on consumption. These indirect taxes include sales tax, customs duties, and excises. In FY22, the federal government accounted for 91.2% of tax collection, partly due to increased taxation of services by provincial governments. Direct taxes, collected by the federal government, make up only around 33% of total taxes collected. One of the key challenges noted in the report is the minimal revenue generated from agricultural income tax, with over 90% of farmers falling below the tax threshold. Additionally, total provincial revenue collection remains less than 1% of GDP. DNA
