How Sindh managed to collect more taxes than Punjab

In the last two fiscal years, the government in Pakistan's Sindh province has managed to collect more taxes than its counterpart in Punjab, according to data released by the federal Ministry of Finance.

The Summary of Consolidated Federal and Provincial Fiscal Operations, 2024-25 showed that in fiscal year 2024-25, Sindh collected PKR 507.07 billion in provincial taxes. In comparison, collection by Punjab stood at PKR 375.07 billion. This translates into a difference of PKR 132 billion.

Punjab is the largest province in Pakistan with a population of 127.69 million. In comparison, the population of Sindh is 55.7 million, according to the 7^th National Census conducted in 2023. Yet for the past two fiscal years, Sindh government has collected more taxes than Punjab government.

These are the taxes collected by provincial revenue authorities, excise departments and boards of revenue.

According to Zeeshan Merchant, a tax and corporate lawyer, taxes collected by the federal government include income tax (except agriculture), customs duty, sales tax on goods, federal excise duty, taxes on corporations, capital gains tax (on securities, property as per law) and withholding taxes.

Provinces collect agricultural income tax, sales tax on services, property tax (urban immovable), motor vehicle tax, professional tax, stamp duty and registration fees, provincial excise duties (on liquor, entertainment and luxury) and others.

Sindh’s revenue collection of PKR 507.07 billion comprised more than half of the PKR 978.62 billion collected as tax by all four provincial governments.

The breakdown of taxes shows Sindh collected PKR 284.43 billion as general sales tax (GST) on services in FY25. Punjab collected PKR 264.02 billion.

This is a tax on services provided by various sectors and businesses, including telecom companies, consultants, lawyers, hotels, restaurants, marriage halls, clubs, caterers, etc.

As excise duty, Sindh collected PKR 8.73 billion compared to Punjab’s PKR 3.66 billion.

Punjab led stamp duty collection with PKR 39.89 billion compared to Sindh’s collection of PKR 25.22 billion.

As motor vehicle tax, Punjab collected PKR 30.79 billion compared to Sindh’s PKR 18.72 billion.

Under other heads, Sindh collected PKR 169.97 billion compared to only PKR 36.7 billion by Punjab.

In FY25, Sindh’s revenue collection went up by 39% from PKR 363.73 billion collected in fiscal year 2024. In comparison, Punjab’s collection increased by only 15% from PKR 326.28 billion.

The ‘Karachi effect’

According to Merchant, the higher tax collection by Sindh was due to Karachi, as headquarters of almost all banks, telecoms, shipping lines, insurance companies and multinational firms are based in the city.

So, even if services are rendered nationwide, the tax is paid in Sindh, he added.

Merchant also pointed out the Sindh Revenue Board (SRB), which collects sales tax on services, is said to be “more autonomous and aggressive in enforcement” than the Punjab Revenue Authority (PRA).

SRB has employed automation, withholding at source and point of sale (POS) integration to expand the tax base. While Punjab has also made progress, it still faces administrative leakages and compliance gaps due to the province’s larger area.

Merchant also credited SRB for quickly expanding the tax net by taxing ride-hailing services, courier companies, restaurants, digital services and IT-enabled services, etc.

Sindh outpaced Punjab revenue collection only in the last two fiscal years. Until FY23, Punjab was ahead in terms of collection—albeit only marginally so.

In FY23, Punjab collected PKR 297.37 billion against Punjab’s collection of PKR 285.12 billion. In the preceding fiscal year, Punjab collected PKR 273.62 billion compared to Sindh’s PKR 268.05 billion.