Revenue body starts FY2024–25 with PKR 755 billion in July collections, boosted by customs and sales tax gains
The Federal Board of Revenue (FBR) has kicked off Pakistan’s fiscal year with a modest victory, collecting PKR 755 billion in July—slightly ahead of its monthly goal of PKR 748 billion. The figure reflects a 15% rise over last year’s performance in the same month, signaling some momentum, but not quite the pace needed to meet its ambitious annual target of PKR 14.13 trillion.
To hit that full-year mark, FBR needs consistent monthly growth of around 20%. While the July numbers show progress, they also highlight vulnerabilities in the country’s tax structure and collection strategy.
Indirect Taxes Carry the Load
July’s revenue growth leaned heavily on indirect taxes. Sales tax and customs duties were the key drivers. Sales tax receipts reached PKR 302 billion—PKR 12 billion above target—while customs duties brought in PKR 106 billion, outperforming by PKR 14 billion.
Officials attributed the customs spike to a wave of cargo clearances that had previously been delayed by importers betting on a possible reduction in tariffs. With those expectations now adjusted, importers moved to release stockpiled shipments, giving customs a temporary bump.
Income Tax Misses the Mark
Not all parts of the tax mix were as robust. Income tax collections fell PKR 15 billion short of their July target, despite posting a modest 5.6% year-on-year increase. According to sources inside the FBR, advance tax payments pushed into June—meant to meet end-of-fiscal-year goals—created a vacuum in July’s inflows.
Federal excise duty also underperformed, contributing to the shortfall on the direct taxation side.
Policy Tensions and Leadership Uncertainty
The FBR’s revenue collection efforts are unfolding against a backdrop of controversy and institutional instability. New enforcement powers—allowing tax officials to arrest individuals suspected of sales tax fraud or to treat certain cash transactions as taxable income—have provoked backlash from the business community. In response, the government has set up a committee to reassess and potentially revise these measures.
Compounding the uncertainty is a leadership vacuum at the FBR. Chairman Rashid Langrial is on medical leave, and Dr. Hamid Ateeq Sarwar—who retired recently—has been called back on a temporary basis to manage operations.
Looking Ahead: Trade Liberalization Could Shift Revenue Dynamics
The government’s ongoing push to liberalize imports and lower tariffs may reshape the revenue landscape in the months ahead. While such policies could spur economic activity, they may also reduce the customs income that has been a lifeline for July’s numbers.
If income and excise tax collections don’t strengthen in the coming months, and if the customs bump proves short-lived, the FBR could struggle to keep pace with its yearly targets. July’s performance is a step in the right direction—but the path ahead is anything but smooth.