Pakistan’s Federal Board of Revenue (FBR) missed its August 2025 tax collection goal by Rs64 billion, raising concerns about the government’s ability to meet its ambitious revenue targets for the fiscal year.
Provisional data shows the FBR collected Rs886 billion in August, reflecting a 12% year-on-year increase but falling short of the Rs950 billion target.
Two-Month Deficit Widens Early in FY26
In the first two months of FY2025-26 (July–August), total tax receipts stood at Rs1.65 trillion—Rs47.5 billion below the cumulative target of Rs1.698 trillion. With a September target of Rs1.385 trillion, authorities will now need to collect at least Rs1.44 trillion to hit the quarterly goal of Rs3.08 trillion by September 30.
The FBR has kept tax offices open through August 31 to capture last-minute payments, expressing optimism that August’s total could edge past Rs900 billion after adjustments.
Weak Electricity, Industry Output Blamed
Tax experts link the shortfall to slowing industrial activity and a sharp drop in electricity consumption, which slashed revenue from power bills to Rs86 billion—down from Rs125 billion a year earlier. Weak enforcement and delayed policy measures, including asset-declaration regulations, have also dampened collection efforts.
Mixed Performance Across Key Revenue Streams
- Income Tax: Rs695 billion collected, meeting the two-month target.
- Sales Tax: Rs625 billion, trailing by Rs65 billion amid sluggish consumer demand.
- Federal Excise Duty: Rs113 billion, slightly underperforming as higher levies weighed on beverage and goods sales.
- Customs Duty: Rs200 billion, surpassing the monthly goal, thanks in part to cargo clearance and tariff adjustments aimed at stimulating imports.
Refund disbursements fell to Rs37 billion in August from Rs53 billion last year, while total refunds for July–August dropped nearly 11% to Rs118 billion.
Ambitious Annual Goal at Risk
The government is targeting Rs14.13 trillion in total revenue for FY26—a 20% jump from last year. Officials had banked on stronger enforcement, recovery of stuck taxes, and formalization measures such as cash deposit rules for traders. But these plans have faced pushback and delays, raising doubts about the achievability of the aggressive targets as early numbers lag expectations.
