FBR “Out of Demand” Tax Recovery Doubles in FY25

The Federal Board of Revenue has reported a substantial increase in income tax recovery under the “Out of Demand” category during fiscal year 2024-25, with collections rising by 110.3% to ₨266 billion compared to ₨127 billion recorded in the preceding fiscal year.

According to the official report, the “Out of Demand” segment emerged as the third-largest contributor to overall income tax receipts during FY25.

The FBR further disclosed that recoveries relating to current demand registered an increase of 78.1%, while collections against arrears demand surged by approximately 207% over the same period.

Tax officials attributed the significant rise in arrears recovery to intensified enforcement actions and enhanced recovery mechanisms implemented by regional field formations across the country.

The report additionally identified voluntary tax payments as the second-largest source of income tax collection during FY25. Voluntary compliance-based payments recorded a year-on-year increase of 25.1%; however, their proportional share in total direct tax revenues slightly declined to 36.5% from 36.9% in the previous fiscal year.

According to the FBR, the increase in voluntary tax receipts was primarily driven by higher advance tax payments collected under Section 147 of the Income Tax Ordinance, 2001.

Collections under the said provision rose significantly to ₨1.894 trillion during FY25, compared to ₨1.53 trillion in FY24.

The revenue authority stated that the sustained growth in voluntary tax payments reflects broader taxpayer participation within the formal tax framework and indicates increased engagement between taxpayers and the national revenue administration.