FBR revenue gap nears Rs1 trillion in 11 months as economy falters

By Staff Reporter

ISLAMABAD: The Federal Board of Revenue (FBR) fell short of its revenue target by nearly Rs1 trillion in the first 11 months of fiscal year 2025, hampered by a faltering economy and plunging imports that gutted domestic sales tax receipts.

The shortfall, driven by sluggish growth and poor tax compliance, shows the challenges facing the cash-strapped country even as it rolls out digital reforms to shore up its revenue collections.

The FBR gathered Rs10.233 trillion from July to May, missing the budgetary target of Rs11.241 trillion, according to provisional data released on Saturday. That’s still a 26% leap from the Rs8.11 trillion hauled in a year earlier. In May alone, the agency collected Rs932 billion against a monthly goal of Rs1.11 trillion, a shortfall of Rs178 billion, though that figure reflects a 22% increase over the Rs762 billion recorded a year ago.

Weak tax compliance, particularly in sales tax, remains an issue for the tax collectors, even after axing hefty exemptions on goods like stationery and infant formula. Officials point to two disruptions in May that compounded the problem: an eight-day farmers’ strike in Sindh that choked supply chains by blocking a key highway, and a recent flare-up with India that slowed port clearances. The FBR has yet to pin down the precise toll of these events on May’s revenue dip.

The International Monetary Fund has dialed back its expectations, trimming the FBR’s full-year target to Rs12.33 trillion from an earlier Rs12.913 trillion, a cut of Rs580 billion. Analysts are even less optimistic, pegging actual collections closer to Rs12 trillion by year-end.

According to breakup, income tax ccollection hit Rs4.9 trillion in the 11 months, overshooting the Rs4.586 trillion target by Rs314 billion, a 27% rise from last year’s Rs3.852 trillion.

A glaring miss was witnessed in sales tax, with Rs3.503 trillion collected against a Rs4.398 trillion goal, off by Rs895 billion. Still, it’s up 27% from Rs2.765 trillion a year ago.

Customs duties receipts reached Rs1.157 trillion, falling Rs263 billion shy of the Rs1.420 trillion target, though up 17% from Rs991 billion last year

Federal Excise Duty collections landed at Rs673 billion, missing the Rs838 billion mark by Rs165 billion, but reflecting a robust 34% increase over Rs503 billion a year earlier.

Refunds and rebates to taxpayers totaled Rs458 billion in the period, up Rs5 billion from Rs453 billion last year. May, however, saw a dip to Rs29 billion from Rs31 billion a year ago.