Pakistan’s tax shortfall has further increased as the Federal Board of Revenue (FBR) missed its revenue target by Rs683 billion during the current fiscal year, while the International Monetary Fund (IMF) has approved a phased increase in petroleum levy, according to Beyond Time News.
Revenue Collection Reaches Rs10.26 Trillion
During July–April FY2025–26, the FBR collected Rs10.26 trillion in taxes. However, this fell significantly short of the revised target, highlighting ongoing pressure on Pakistan’s fiscal position.
The IMF has already rejected any further reduction in the annual tax target of Rs13.98 trillion, keeping pressure on authorities to improve revenue collection.
IMF Allows Phased Fuel Levy Increase
According to an understanding with the IMF, Pakistan will now implement the remaining Rs53-per-litre increase in petroleum levy in two phases instead of a single adjustment.
The government had earlier planned to pass the full increase to consumers from May 1, but Prime Minister Shehbaz Sharif’s economic team sought flexibility to ease immediate pressure while still securing IMF funding.
As a result, fuel prices were adjusted again, with changes in both petrol and diesel levies.
The revised structure includes:
- Diesel levy increased to around Rs29 per litre
- Petrol levy adjusted to about Rs103.5 per litre
Despite adjustments, both fuel prices have still increased, adding pressure on consumers already facing high inflation.
Rising Pressure on Fiscal Targets
The government is relying heavily on petroleum levies and reduced development spending to meet its primary budget surplus target agreed with the IMF.
Officials said levy collection is performing better than expected, with over Rs1.33 trillion collected in the first 10 months against an annual target of Rs1.468 trillion.
However, weak tax performance continues to strain overall revenue.
Major Gaps in Tax Categories
FBR’s performance shows shortfalls across key tax heads:
- Income tax: Rs5.08 trillion collected (short by Rs210 billion)
- Sales tax: Rs3.42 trillion (short by Rs382 billion)
- Federal excise duty: Rs673 billion (short by Rs14 billion)
- Customs duty: Rs1.08 trillion (short by Rs79 billion)
Overall growth in tax collection stood at around 10.5%, below the level needed to meet annual targets.
Aggressive super tax recovery opposed
Monthly and Refund Impact
In April alone, the FBR collected Rs956 billion against a target of Rs1.029 trillion, missing the goal by Rs72 billion.
Tax refunds worth Rs499 billion were also issued during the 10-month period, further impacting net revenue collection.
IMF Review Linked to Legal Recovery Cases
The IMF has also linked the release of a $1.2 billion loan tranche to Pakistan’s ability to recover Rs322 billion tied up in court cases, adding another layer of fiscal pressure.
Conclusion
With a widening tax shortfall and rising reliance on fuel levies, Pakistan’s fiscal situation remains under pressure despite increased overall revenue collection, according to Beyond Time News.
