The federal government is weighing two paths for Pakistan’s tax system: an entirely new tax collection agency, or a deep restructuring of the Federal Board of Revenue. Prime Minister Shehbaz Sharif has told the FBR to submit comprehensive proposals on HR reforms, revamping and restructuring by October 19, after declaring the board’s performance unsatisfactory. The Express Tribune reported on October 16 that the new-agency option was floated at a top-level meeting on October 10, with FBR Chairman Rashid Langrial tasked with preparing the plan. Discussions remain preliminary and no decision has been taken, and any new body carrying FBR’s powers would need amendments to the FBR Act 2007 and several tax laws. The FBR has denied suggestions that revenue collection could be outsourced to a private company, calling the claim “totally baseless.”
The October 19 deadline and what the PM ordered
The Prime Minister’s Office issued its directive on Thursday, October 15, ordering the FBR to submit “comprehensive proposals on HR reforms, revamping and restructuring” by October 19. The idea of creating an entirely new organisation was raised at the highest-level meeting on Saturday, October 10, and the FBR chairman has since tasked officers with preparing the plan. An FBR spokesperson said “the FBR’s reform is a robust and ongoing process, and dozens of ideas and proposals come under discussion… until any of them becomes a formally approved policy, no comment can be made.” The board says the prime minister is personally overseeing the process, and that the government’s aim is “a stronger, more efficient and more taxpayer-friendly FBR.”
The revenue numbers forcing the move
Pakistan’s tax-to-GDP ratio was stuck at 10.3 percent last fiscal year, and the FBR missed its annual target by more than Rs1.1 trillion. This year’s target is Rs15.263 trillion, which needs growth above 17 percent, but collection grew only about 7 percent in the first quarter, pointing to a shortfall of more than Rs650 billion. Reform efforts go back to 2000, with a Rs55 billion transformation programme launched in 2024, and the FBR points to faceless assessment in Customs, digital invoicing and AI-based risk management for audits as changes already in place. The weak revenue numbers are the engine behind the current debate, and they sit at the heart of Pakistan’s wider economic picture, from the US dollar to Pakistani rupee exchange rate today to corporate earnings tracked in our KSE-100 week-in-review.
The legislative gauntlet
If the government decides on a separate agency, it cannot do it by notification alone. Creating a body with FBR’s powers would require amendments to the FBR Act 2007 and changes to several tax laws, which means the plan would have to pass through Parliament and survive legal and political scrutiny. That legislative requirement is one reason the discussions remain preliminary: restructuring the existing board is administratively simpler than birthing a new institution.
What it means for the record 6.71 million filers
This is where the story meets the taxpayer. Dawn reported on October 16 that 6.71 million income tax returns had been filed by October 14, up 34.38 percent from 4.99 million last year, with Rs66.81 billion in tax paid, up 14.61 percent. Non-salaried filers rose 46.35 percent to 4.45 million, salaried filers 16.16 percent to 2.18 million, while company filers fell 22.41 percent to just 11,089. The return deadline has been extended to October 31 under Section 214A of the Income Tax Ordinance, 2001, after requests from trade bodies and tax bar associations. The FBR says the goal of reform is a “more taxpayer-friendly” board, so the question for filers is practical: whether the systems they already use, such as faceless customs assessment and digital invoicing, become easier, and whether a new agency would change how audits and appeals work. The petrol price of Rs390.23 per litre on October 16 already carries an Rs80 per litre petroleum levy, a reminder that tax policy reaches citizens through many channels, not just the return form. For now, watch October 19: the proposals will show whether the government picks deep surgery on the FBR or the far bolder route of a new agency. Either way, the decision lands in the middle of a revenue year the board is already losing, and the latest Pakistan business and economy news will track what comes next.
