By Staff Reporter
ISLAMABAD: The Federal Board of Revenue (FBR) fell short of its fiscal year 2024-25 tax target, collecting Rs11.735 trillion against an original goal of Rs12.97 trillion, according to provisional figures.
The miss, even after two downward revisions to Rs11.9 trillion, raises questions about the agency’s ability to hit next year’s ambitious Rs14.131 trillion target. The shortfall of Rs1.235 trillion highlights persistent challenges for the FBR. The tax collection target was adjusted downward twice during the fiscal year, first to Rs12.332 trillion in February/March 2025, and then to Rs11.9 trillion during the 2025-26 budget process.
Even with these reductions, the FBR fell short, meaning it will need to ramp up efforts significantly to meet the FY 2025-26 target, which begins July 1, 2025.
The government, constrained by this revenue gap, is expected to tighten expenditures to keep the fiscal deficit—particularly the primary balance—within the limits agreed with the International Monetary Fund for June 2025.
Some relief came from lower-than-expected interest payments, which dropped to Rs8.9 trillion from an initial projection of Rs9.7 trillion, saving Rs0.8 trillion.
“The annual tax collection target was ambitiously set at PKR 12.3 trillion, marking a substantial 32 per cent increase compared to the PKR 9.3 trillion collected during FY 2023-24,” the FBR said in a statement.
It noted that the target assumed an autonomous growth rate of 15% for the fiscal year. “Given the subdued economic environment and lower than expected autonomous growth, the estimated tax collection for FY 2024-25 without any corrective measures would have been projected to PKR 10.07 trillion,” the statement added.
The FBR highlighted the government’s focus on controlling inflation as a factor in the shortfall. “If the government had opted for fiscal policies that sustained higher inflation, it would have led to a corresponding increase in interest rates along with an increase in debt repayments. Such policies would have disproportionately burdened lower-income households, decreasing their purchasing power and deepening economic inequality,” it said.
“In contrast, by maintaining inflation at relatively low levels, the government has provided critical relief to vulnerable segments of the population, particularly those living near or below the poverty line, and safeguarded their real incomes and cost-of-living pressures.”
Despite the tough conditions, the FBR pointed to its efforts to boost revenue. “In response to the challenge of lower collection due to macroeconomic pressures, the FBR undertook significant efforts to strengthen enforcement, improve administrative efficiency, and implement new policy measures,” it said.
“These interventions successfully elevated the provisional total tax collection to PKR 11.735 trillion, representing a 26 percent increase over the previous year.”
The provisional total of Rs11.735 trillion comprises Rs5.784 trillion in income tax, which grew by 28% from the previous year, Rs3.9 trillion in sales tax with a 26% increase, Rs0.767 trillion in customs duty showing 16% growth, and Rs1.284 trillion in federal excise duty, up by 27%.
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