RTO expands tax drive as export slowdown pressures revenues

FAISALABAD: The Regional Tax Office (RTO) Faisalabad has stepped up efforts to widen the tax base by focusing on retailers, wholesalers, distributors and traders as collections linked to exports slow and import tax revenues remain stagnant, according to officials.

Chief Commissioner RTO Dr Shah Khan told media representatives that the office is working to meet an annual tax collection target of Rs160 billion by June 2026 despite mounting economic pressures tied to regional geopolitical tensions since late February 2026.

He said the ongoing Iran-US-Israel conflict has begun affecting trade flows, with taxes connected to exports and imports showing a visible slowdown from the second week of April. According to Dr Shah Khan, the impact of the trade cycle reaches tax receipts with a lag of around 45 days to two months, and the current downturn is now appearing in withholding tax, sales tax, import income tax and export-related tax heads.

Dr Shah Khan said the import and export sectors had earlier been recording growth of 15% to 20%, but that pace has now come to a halt, increasing pressure on revenue goals.

He said the tax administration has therefore turned to other sources of revenue, including closing audits, recovering pending dues, conducting stock-taking exercises and increasing field visits in sectors such as textiles, processing units, hospitals and marquees.

According to the chief commissioner, Faisalabad’s average monthly tax collection is about Rs14 billion. He said nearly 60% of that amount comes from income tax, including domestic and import-related sources, while the rest is generated through sales tax and federal excise duty.

He also noted that taxes from major industries such as sugar and cement are deposited in other jurisdictions because of where production takes place, which affects Faisalabad’s local collection figures.

Monitoring and enforcement

Dr Shah Khan said the RTO has identified under-invoicing and misreporting in the textile and processing sectors. He said field teams are monitoring gaps between declared figures and the actual consumption of raw materials, while enforcement teams are carrying out inspections and audits to check tax evasion and improve compliance.

Broadening the tax net

On efforts to bring more people into the formal tax system, the chief commissioner said the department is relying on several data sources, including property records, vehicle registrations, club memberships and withholding tax information under Sections 236G and 236H, to trace potential taxpayers.

He said CNIC-based data is being used to register new taxpayers and compel return filing through notices. Once registered, those individuals become part of the formal tax system and can be audited. "Currently, the burden is disproportionately on existing taxpayers, but the goal is to bring more contributors into the system," Dr Shah Khan said.

underscoring the department’s push to spread the tax burden more broadly as revenue pressures intensify.