The Pakistan Federal Revenue Board (FBR) faces a growing challenge. Nearly 39% of income tax returns filed in tax year 2025 (TY25) reported zero income. The trend has raised serious concerns within the Federal Board of Revenue (FBR) about weak enforcement and the credibility of the country’s tax base.
By October 31, taxpayers submitted 5.912 million returns. Out of these, 2.262 million were nil returns. As a result, only 3.65 million filers declared any taxable income. This highlights a widening gap between the return filed and the actual tax contribution.
As reported by Mubarak Zeb Khan of Dawn News, the pattern of nil-filing extends across individuals, associations of persons (AOPs), and corporations. Many taxpayers file zero-income returns to qualify for placement on the Active Taxpayers List (ATL). They also do it to secure lower withholding tax rates on financial transactions.
Tax officials worry that the system increasingly incentivises form over substance. Instead of paying taxes, many individuals file returns solely to maintain filing status.
Read: FBR Amends 2025-26 Income Tax Rules For The None Fillers
In TY25, individuals filed 5.805 million income tax returns, of which 2.206 million declared no taxable income. This means 38% of individual filers reported zero income. It is a level consistent with the previous tax year and indicative of a persistent structural issue.
Despite filing returns, these taxpayers contribute nothing to revenue, raising questions about the effectiveness of compliance measures. Surprisingly, the corporate sector recorded the highest proportion of nil filers. Out of 17,873 corporate returns, 13,739 companies (76.87%) declared zero income. Only 4,134 companies reported taxable profits.
Given that corporations operate within a documented framework, the figures have intensified concerns. There is worry about underreporting and enforcement failures in the formal business sector.
Associations of Persons emerged as the second-largest category of nil-filers. Of 89,510 AOP returns, 42,834 (47.85%) reported nil income. This left only 46,676 AOPs declaring taxable earnings, reinforcing fears of widespread income suppression.
Internal FBR analyses reveal a stark contrast between declared income and observed lifestyles. Many nil-filers live in luxury homes, travel frequently, drive expensive vehicles, and spend heavily on branded goods. However, their tax returns fail to reflect these standards of living.
