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–Pakistan’s tax authority falls behind revised collection goal in first 10 months, raising fiscal concerns
Aftab Maken
ISLAMABAD: Federal Board of Revenue (FBR) has failed to meet its revenue collection target during the first 10 months of fiscal year 2025-26, with a shortfall of Rs 683 billion, according to provisional data released by officials.
The FBR collected Rs10,263 billion from July to April, significantly below the revised target of Rs10,946 billion, reflecting persistent challenges in tax mobilization amid a fragile economic environment.
Revenue performance remained weak in April 2026 as well, with collections recorded at Rs 956 billion against a monthly target of Rs1,029 billion, resulting in a gap of Rs73 billion. The continued underperformance highlights pressure on fiscal accounts as the government approaches the end of the financial year.
Breakdown of April collections shows that income tax contributed Rs446 billion, while sales tax generated Rs 320 billion. Federal excise duty added Rs 65 billion, and customs duty accounted for Rs125 billion. Despite contributions from all major heads, overall receipts remained insufficient to meet targets.
Analysts link the shortfall to subdued economic activity, lower import volumes, and structural weaknesses in Pakistan’s tax system. The Pakistan Bureau of Statistics has reported mixed trends in industrial output, suggesting that while some recovery is underway, overall economic momentum remains below potential, limiting tax generation capacity.
The development comes despite the government revising downward its annual tax target earlier in the fiscal year. The original target of Rs14,307 billion was reduced by Rs 328 billion to Rs13,979 billion, acknowledging economic constraints. However, the current gap indicates that even the revised goal may be difficult to achieve without significant improvement in collections.
Experts say Pakistan’s narrow tax base and reliance on indirect taxation continue to hinder sustainable revenue growth. Efforts to expand documentation, bring non-filers into the tax net, and improve enforcement have yielded limited results so far.
The revenue shortfall also carries implications for Pakistan’s commitments under the International Monetary Fund (IMF) programme, where higher tax collection is a key requirement for fiscal consolidation. Weak revenues could force the government to either introduce additional taxation measures or cut expenditures to contain the budget deficit.
Fiscal stability remains closely tied to revenue performance, as lower-than-expected collections can disrupt development spending and increase reliance on borrowing. Economists warn that persistent gaps may undermine confidence in fiscal management if corrective measures are not taken promptly.
Looking ahead, the upcoming federal budget for 2026-27 is expected to focus heavily on tax reforms and revenue enhancement measures. The Federal Board of Revenue will face mounting pressure to improve efficiency, broaden the tax base, and ensure compliance to stabilize Pakistan’s fiscal outlook.
