By Staff Reporter
ISLAMABAD: The Federal Board of Revenue missed its collection target by Rs684 billion during the first 10 months of fiscal 2026, tax officials said, with much of the gap traced to trade disruptions caused by the ongoing Middle East conflict.
The shortfall has grown more pronounced over the past two months as the conflict curtailed import volumes, slowed trade flows, and dampened overall economic activity, officials said. Sales tax collected at the import stage bore the brunt of the weakness.
In April alone, the conflict shaved an estimated Rs40 billion off revenue, including a Rs15 billion hit from lower gas imports, the officials said. That figure does not include the additional drag from government austerity measures and a sharp slowdown in domestic consumption, both of which further crimped tax receipts.
Detailed data for April underscored the selective nature of the pressure. Sales tax and federal excise duty collected at the import stage posted negative growth for the month, while withholding taxes rose 4% and customs duties climbed 9%. The pattern points to stable or modestly higher import values in some categories but a clear erosion in the consumption- and excise-linked tax base.
Domestic sales tax, by contrast, showed relatively firmer performance, rising about 9% from a year earlier. Taken together, April’s numbers reflected subdued consumer demand and targeted import compression, with customs duties and domestic sales tax providing limited offset against the deeper weakness in import-stage levies.
Overall, FBR collections for July through April climbed 10% to Rs10.262 trillion from Rs9.295 trillion in the same period a year earlier. The authority had targeted Rs10.946 trillion for the 10-month span. April collections alone rose 13% to Rs956.3 billion from Rs846 billion a year earlier, yet still fell Rs72.7 billion short of the monthly target of Rs1.029 trillion.
The International Monetary Fund, in its most recent review, had already cut the FBR’s full-year target by Rs150 billion. The revision reflected growing recognition of the headwinds facing Pakistan’s revenue machinery.
For the full fiscal 2025, the FBR had missed its target by nearly Rs163 billion, even after two downward revisions, collecting Rs11.737 trillion against a revised goal of Rs11.900 trillion. That outcome nonetheless represented a 26.19% increase from Rs9.301 trillion in fiscal 2024.
Refunds and rebates issued by the FBR during the first 10 months of fiscal 2026 totalled Rs499 billion, up 15.77% from Rs431 billion a year earlier. A breakdown of the 10-month performance shows uneven results across tax heads. Income tax reached Rs5.084 trillion, missing the Rs5.294 trillion target by Rs210 billion but rising 14% from Rs4.476 trillion in the prior year. Sales tax totalled Rs3.425 trillion, Rs383 billion below the Rs3.808 trillion target, and grew 8% year on year. Customs duties came in at Rs1.080 trillion against a Rs1.158 trillion goal, a Rs78 billion shortfall, though still 4% higher than Rs1.042 trillion a year earlier. Federal excise duty stood at Rs673 billion, just below the Rs687 billion target, and advanced 12% from Rs603 billion.
The numbers paint a picture of a revenue authority wrestling with external shocks at a time when domestic demand remains fragile. While headline growth remains positive, the persistent gap between targets and actual collections highlights the vulnerability of Pakistan’s tax base to global disruptions and internal restraint.
Copyright © 2021 Independent Pakistan | All rights reserved
