Islamabad – More than Rs4 trillion in tax revenue is currently held up due to over 100,000 pending cases in courts, as Pakistan faces a projected shortfall of over Rs600 billion in tax collections for the current fiscal year. This was revealed in a meeting chaired by Chief Justice of Pakistan (CJP) Yahya Afridi on November 7, 2024, which included officials from the Federal Board of Revenue (FBR) and the Ministry of Finance.
The meeting disclosed that Rs4.457 trillion is involved in over 108,000 cases still pending in higher courts across the country. With the government striving to meet an International Monetary Fund (IMF) review for a loan program, this backlog has created significant hurdles in the country’s financial management. The FBR’s target for tax collection is Rs9,168 billion by March 31, but the current tax shortfall stands at Rs604 billion, with the FBR only collecting Rs7,343 billion in the first eight months of the fiscal year.
One major factor behind the delays is the pending 6,000 tax cases in the Supreme Court alone, which involve billions of rupees in potential recoveries. Another 2,000 cases are stuck at various tribunals and lower courts, where prolonged stay orders have further delayed tax resolutions, blocking crucial revenue inflows.
In response to this issue, the Supreme Court has formed a special committee, headed by Ishtiaq Ahmed Khan, to identify the causes of these delays and recommend solutions. The committee has already engaged key stakeholders, including FBR officials, the Supreme Court Bar Association, and the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), to understand the underlying problems.
The committee identified key issues such as the lack of dedicated revenue benches in courts, inadequate alternative dispute resolution (ADR) mechanisms at the FBR and provincial revenue departments, and excessive appeals by revenue authorities, which prolong litigation unnecessarily.
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To address these challenges, the committee has suggested establishing dedicated revenue benches in the Supreme Court and high courts, implementing binding ADR mechanisms at the FBR, and limiting unnecessary appeals after decisions have been made at multiple judicial levels. Other recommendations include adhering to strict case disposal timelines, creating a centralized database for case law, and utilizing technology to streamline case management.
These reforms are seen as essential to unblock the revenue pipeline and address Pakistan’s fiscal challenges. The committee is expected to present its final report soon, with experts warning that failure to resolve these issues promptly could worsen Pakistan’s already strained financial situation.
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