The Federal Board of Revenue (FBR) has once again fallen short of its annual revenue target despite collecting more than Rs11 trillion in taxes during the fiscal year.
According to available figures, FBR collected Rs11.232 trillion against a revised revenue target of Rs12.01 trillion. This left a shortfall of approximately Rs864 billion, even after multiple taxation measures were introduced throughout the year.
The tax authority increased withholding taxes and duties across several sectors in an effort to boost revenue. However, the measures were not enough to achieve the revised target.
To meet its overall goal, the government now requires around Rs2.75 trillion in revenue during June alone. This translates to nearly Rs91.6 billion in daily collections, a challenging target given the current pace of revenue generation.
Overall tax collection growth remained around 10 percent during the year. This figure was lower than the economy’s nominal growth rate, highlighting the pressure facing revenue authorities.
A closer look at the numbers shows that income tax remained the largest source of revenue. The government collected Rs5.54 trillion through income tax, although a gap of Rs261 billion still remained against the target.
Sales tax collections reached Rs3.78 trillion. However, this category recorded the largest shortfall, missing the target by Rs457 billion.
Federal excise duty generated Rs745 billion in revenue. While collections were slightly below target, they still recorded growth of around 15 percent compared to the previous period.
Meanwhile, customs duty collections stood at Rs1.18 trillion. Despite increasing imports, customs revenue remained Rs116 billion below the target.
The government also paid out significant tax refunds during the year. Refund payments reportedly crossed Rs551 billion, adding further pressure to revenue management efforts.
To bridge the revenue gap, policymakers are considering additional tax measures. Reports suggest that higher withholding taxes on imports, revised income tax rates for wholesalers, and increased turnover taxes on businesses are among the options under review.
Authorities are also considering applying sales tax on fast-moving consumer goods at full market prices. A potential windfall tax on oil companies is reportedly being discussed as well.
The proposed measures are linked to broader fiscal reforms and commitments related to international financial obligations, including IMF-backed programs.
Small traders may receive some relief under proposed plans. A one percent tax on annual turnover up to Rs200 million is being considered instead of higher rates.
The government is also reviewing tax incentives for plug-in hybrid vehicles. Reduced sales tax rates currently available for these vehicles are expected to expire in June 2026, with a standard 18 percent sales tax under consideration afterward.
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As revenue pressures continue to grow, FBR faces the challenge of increasing collections while balancing economic activity and public concerns over rising taxation.
