To balance the equation of nature, the world adopted the ideology of laws which later propelled the taxation schemes for the sake of the state’s revenue. The concept of taxation is not novel rather it could be traced back to 1776 with a different identity ‘Barter’ who would exchange goods instead of money, Adam smith introduced the concept in his book ‘The wealth of Nation’.

In Athens taxes were usually imposed during wars only known as ‘Eisphora’ During the Roman Empire all erratic taxes were imposed such as the window tax which illustrated property tax based on its winds and the outlandish beard tax imposed by Peter the Great, ruler of Russia from 1682 until 1725.

Pakistan’s Income Tax Ordinance 2001 governs taxation, with significant exemptions for agriculture and NGOs, ensuring fairness in the system.

History utters how the British imposed sugar taxes and Stamp Act after defeating France in a seven-year war in 1763 AD to pay down a debt approaching £140,000,000 Jizyah is an Islamic tax described in the Quran as a tax that is imposed on a certain erring faction from among the People of the Book (Ahl al-Kitab; non-Muslim groups such as Christians and Jews recognized in the Quran as possessing a divine scripture) who violate their own religious and ethical principles (9:29) in return of it non-Muslims were granted protection.

If Muslim authorities were unable to defend the dhimmis(the protected people) in the event of an attack, the former were required to return the jizyah to the latter. though in the era of Umar ibn al-Khattab the jizyah was levied on non-Muslim Arab tribes in lieu of military service, Performance of military service earned an exemption. An income tax was first enacted in Mauritius in 1932 (Ordinance 21 of 1932, the Income Tax Ordinance), which came into force on 1 July 1934.

History has paved the way for precautionary measures any territory has ever took for the sake of the revenue of the state. I have seen many people misinterpreting Filer with an obligation of paying taxes even if they hardly make ends meet, in lieu it’s the opposite, becoming a filer wouldn’t oblige a person to taxes unless the yearly income of salary person exceeds 6 lakh in the bank accounts.

The Income Tax Act 1922 was the souvenir of British raj to both India and Pakistan, In Pakistan the Income Tax Ordinance 2001 was promulgated on 13 September 2001 and became effective from 1 July 2002. The government has announced a stunning Rs1.761 trillion in new revenue measures for the next fiscal year, which, a deeper examination reveals, may contribute to another bout of inflation in the country.

Pakistan tax laws are implemented under Income Tax Ordinance,2001 Section 41 to Section 55 deals with the exemption from the tax clauses which indicate that a farmer unless and until making a yearly income over 12 lahks is not eligible for tax which shows that taxes are not the cruel laws of sovereign similarly all public welfare NGOs are not compelled to pay taxes but they are bound to show their income source and I guess that’s a right of state to know if it’s providing them with a gateway of life as well an identity, a nationality.

Pakistan’s debt stands at Rs. 62.881 trillion, with IMF bailout agreements shaping the country’s economic reforms.

Under section 74 of the Income Tax Ordinance, the 2001 tax year is a period of twelve months starting from July 1^st of each year to the 30^th of June although the crucial month for filing a return or keeping a status active in the taxpayer list, is usually from 1^st July to 30^th September if other than first-time filer people who always file their return in these months, they won’t have to pay the ATL (active taxpayer list) Challan which is of a fixed amount 1000.

Gifts, Inherited property, and foreign sources of income are exempt from taxes. The amount of withholding tax is refundable also it plays an essential role in the direct revenue of the state and on second thought it can be called advance tax. With recent amendments, it differs from 0.6 percent to 0.9 percent for non-filers and filers respectively on cash withdrawals and deposits. The government has increased the withholding tax on services and contracts by 1 percentage point, expected collection of Rs1.5 billion per month simultaneously.

Pakistan is estimated to be in debt for about Rs. 62.881 trillion which is 74.3 percent of the gross domestic product (GDP) of Pakistan. Pakistan went to the IMF (International Monetary Fund) 23 times, for bailouts but in the current phase IMF seems kind of annoyed by Pakistan and its economic breakdown every time along with the loan there’s an agreement that is more like instructions from the IMF which is why historical transactions imply that IMF engagements significantly shape Pakistan’s economic reform agenda.

IMF staff and Pakistan have come to an agreement under Pakistan’s Stand By Arrangement, following the approval from the IMF Executive Board.       If approved, Pakistan will be able to access SDR 828 million (approximately US$1.1 billion). Specifically, the government is committed to reaching the fiscal year 2024 primary balance target of PRs 401 billion (0.4 percent of GDP), by expanding the tax base and ensuring that power and gas tariffs are adjusted promptly to cover the costs.

The government aims to collect Rs12.97 trillion in revenue for FY25, a 40% increase over FY24.

Taxes are the savings of the citizens under the regime of their country of residence, later which are meant to be used for the well-being of those citizens. As per the FBR press release During the FY 2023-24 tax year Pakistan has collected 9306 billion in taxes which is believed to be 30 percent more as compared to last year. Although the FBR collection of taxes was falling short of its Rs1.554 trillion target by Rs98 billion.

In July, Pakistan reached a Staff-Level Agreement (SLA) with the International Monetary Fund (IMF) for a $7 billion 37-month Extended Fund Facility (EFF), aimed at stabilizing the country’s economy. Looking ahead, the government has set an ambitious revenue collection target of Rs12.97 trillion for FY25, a 40% increase over the target for FY24.

Disclaimer: The opinions expressed in this article are solely those of the author. They do not represent the views, beliefs, or policies of the Stratheia.