WEBDESK: Pakistan faces a projected tax shortfall exceeding 600 billion rupees this financial year, despite the government’s efforts to improve tax collection. A recent revelation has disclosed that more than 4 trillion rupees in tax revenue remains stuck due to over 100,000 pending cases in various courts, exacerbating the country’s financial challenges.
According to a Geo TV report, the issue was highlighted in a high-level meeting held on November 7, 2024, chaired by Chief Justice Yahya Afridi. Officials from the Federal Board of Revenue (FBR) and the Finance Ministry participated in the discussion, where it was revealed that 108,000 pending cases in higher courts involve tax revenue disputes amounting to 4.457 trillion rupees.
The timing of this development is critical, as Prime Minister Shehbaz Sharif’s administration awaits the IMF’s first review for a loan program, with the FBR grappling with a 604 billion rupee tax shortfall. The board must collect 1.825 trillion rupees in March 2025 to meet the annual tax revenue target of 9.168 trillion rupees by March 31. So far, 7.343 trillion rupees have been collected against the 7.947 trillion rupee tax revenue target, leaving a significant gap.
Legal Delays and Proposed Solutions
The Supreme Court of Pakistan has now formed a special committee to address the delays in tax-related litigation. The committee includes Supreme Court Registrar Saleem Khan, tax experts, and FBR officials and is actively consulting stakeholders, including tax bar associations and business leaders.
The committee has identified several key issues:
- Lack of dedicated tax benches in higher courts, delaying case resolutions.
- Absence of an Alternative Dispute Resolution (ADR) mechanism, forcing businesses and tax officials into prolonged legal battles.
- Unnecessary appeals filed by tax authorities, further burdening the judiciary.
- Years-long case delays due to stay orders, preventing the recovery of owed revenue.
To tackle these challenges, the committee has recommended:
- Establishing special tax benches in Supreme Court and High Courts.
- Implementing a binding ADR system in FBR.
- Restricting tax authorities from appealing cases already settled in two court levels.
- Enforcing strict timelines for case resolution.
- Developing a centralized case law database to streamline judicial decision-making.
- Utilizing technology for efficient case management and ensuring cases with similar legal questions are heard together.
With Pakistan’s economy already under pressure due to low tax collection rates, experts warn that failure to resolve these legal bottlenecks could further strain the country’s financial stability and tax revenue. The Supreme Court’s intervention, along with structured legal and administrative reforms, is now seen as the most viable path to ensuring fiscal stability and tax justice.
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