Islamabad, Mar 30, 2025: Pakistan’s Federal Board of Revenue (FBR) has missed its tax collection target by approximately Rs716 billion in the first nine months of the ongoing fiscal year, primarily due to lower revenue from import duties and subdued inflation affecting tax receipts.
Between July and March of FY25, Federal Board of Revenue (FBR) the accumulated Rs8.452 trillion in taxes, falling short of the budgeted target of Rs9.168 trillion.
However, this marks a 27% rise compared to the Rs6.665 trillion collected in the same period last year.
For the month of March alone, the Federal Board of Revenue (FBR) collected Rs1.114 trillion against a target of Rs1.219 trillion, leaving a shortfall of Rs105 billion.
Despite this, tax collection in March increased by 32% year-on-year, as it stood at Rs841 billion in March 2024, according to preliminary data released on Saturday.
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A tax official highlighted that despite economic sluggishness and lower inflation, revenue collection saw a 32% annual increase in March.
This growth is largely attributed to intensified enforcement measures, particularly in the sugar industry, which witnessed a 39% rise in revenue over the past three months.
“We expect further improvement in revenue collection during the final quarter,” the official stated. He also noted that the International Monetary Fund (IMF) had already adjusted the FBR’s tax target downward.
The IMF revised the annual collection goal for FY25 from Rs12.913 trillion to Rs12.333 trillion, reducing it by Rs580 billion.
The global lender has indicated a willingness to further lower the target. However, Prime Minister Shehbaz Sharif has urged the FBR to strengthen its efforts to meet the existing goal.
The revenue shortfall is largely due to weaker collections from imports, a slowdown in industrial production, and unexpectedly low inflation, which has dropped to single digits in recent months.
In the first nine months of FY25, the Federal Board of Revenue (FBR) disbursed Rs384 billion in refunds to taxpayers, reflecting a modest 1.58% increase from Rs378 billion in the same period last year.
However, in March alone, refund payments plummeted by nearly 52% to Rs34 billion compared to the previous year.
The government’s initial projections for FY25 included an additional Rs3.659 trillion in revenue, based on economic growth of 3%, a 3.5% expansion in large-scale manufacturing, inflation at 12.9%, and a 16.9% increase in imports.
However, independent economic analysts predict that actual tax revenue for FY25 will likely hover around Rs12 trillion.
During July-March, income tax collection stood at Rs4.127 trillion, exceeding the Rs3.841 trillion target by Rs286 billion. This represents a 27% surge compared to last year’s Rs3.238 trillion.
Meanwhile, sales tax collection fell short by Rs653 billion, reaching Rs2.860 trillion against the projected Rs3.513 trillion. Nevertheless, sales tax revenue recorded a 29% rise compared to Rs2.225 trillion collected in the same period last year.
Customs duties also underperformed, missing the target by Rs207 billion, with total collections standing at Rs927 billion. This, however, reflects a 16% increase over last year’s Rs801 billion.
The Federal Excise Duty (FED) collection also failed to meet expectations, falling Rs143 billion short at Rs537 billion in the first nine months of FY25. Still, this represents a 34% rise from the Rs401 billion collected last year.
As the fiscal year progresses, theFederal Board of Revenue (FBR) faces increasing pressure to enhance tax collection efforts and bridge the revenue gap while ensuring compliance with the IMF’s fiscal targets.
