ISLAMABAD: According to Beyond Time News, the Federal Board of Revenue (FBR) has fallen significantly short of its tax collection target, missing it by Rs864 billion during the current fiscal year. The shortfall has intensified pressure on the government as it prepares the upcoming budget under strict fiscal conditions.
Officials say the tax machinery now faces an extremely challenging target for June, requiring approximately Rs2.75 trillion in collections within a single month—equivalent to nearly Rs91.6 billion per day—to meet the revised annual goal.
Weak Revenue Performance Raises Fiscal Concerns
During the July–May period, the FBR collected Rs11.232 trillion, falling well below the revised target of Rs12.01 trillion. The gap highlights persistent weaknesses in revenue generation despite multiple policy measures introduced during the year.
Even with adjustments in tax policies and inflation-driven price increases, overall growth in tax collection remained around 10%, which is lower than the nominal growth rate of the economy.
The original annual target for the fiscal year was Rs14.130 trillion, later revised downward to Rs13.98 trillion due to shortfalls in collections.
May Collections Also Fall Short
The revenue authority also missed its May target by Rs184 billion, collecting Rs966 billion against the target of Rs1.150 trillion.
Despite the shortfall, monthly collections showed a modest increase of around 3% compared to the same period last year. Officials confirmed that refunds worth Rs50 billion were issued during May, contributing to overall fiscal pressure.
Total refunds during the fiscal year reached Rs551 billion, significantly higher than the previous year.
Breakdown of Tax Collection Performance
Income Tax
Income tax collection stood at Rs5.54 trillion, falling short of its target by Rs261 billion. However, receipts still showed a 13% increase compared to last year, supported partly by recovery of super tax following court rulings.
Sales Tax
Sales tax collection reached Rs3.78 trillion, missing the target by Rs457 billion while posting a year-on-year growth of 7.8%.
Federal Excise Duty
Excise duty collection totaled Rs745 billion, reflecting a 15% increase over the previous year but still falling short of the target by Rs31 billion.
Customs Duty
Customs duty collections stood at Rs1.18 trillion, missing the target by Rs116 billion. Growth in this segment remained limited at just 2%, despite increased import volumes.
Policy Adjustments Under Consideration
Sources indicate that the government is preparing a series of revenue measures as part of commitments with the International Monetary Fund (IMF), aimed at generating an additional Rs215 billion.
Proposed measures under consideration include adjustments in income tax schedules, particularly those affecting wholesalers and import-related taxes.
Possible Tax Changes in the Upcoming Budget
Among the proposals being evaluated:
- Increase in withholding taxes on selected imported goods
- Revision of income tax rates for the wholesale sector
- Market-based sales tax on fast-moving goods
- Higher sales tax on plug-in hybrid vehicles, potentially raised from reduced rates to 18%
Currently, hybrid vehicles are taxed at reduced rates:
- 8.5% for up to 1,800cc
- 12.75% for 1,801cc to 2,500cc
These concessions are set to expire on June 30, with no confirmed extension so far.
FBR Simplifies Online Tax Return Filing for Overseas Pakistanis
Traders’ Scheme and Sector-Specific Measures
The government is also considering a simplified taxation scheme for small traders, proposing a 1% tax on businesses with annual turnover up to Rs200 million.
Additionally, a 20% windfall tax on oil sector companies is under review as part of broader revenue enhancement efforts aimed at meeting IMF targets.
Fiscal Gap Offset Through Alternative Measures
Officials have reportedly been compensating for revenue shortfalls through increased petroleum levies and reduced development spending. While this approach has helped maintain a primary budget surplus, analysts warn it may create an artificial sense of fiscal stability.
Outlook
With a substantial revenue gap still unresolved and June requiring record daily collections, the FBR faces one of its most challenging fiscal periods in recent years. The upcoming budget is expected to heavily rely on new tax measures and adjustments to existing rates to stabilize revenue performance.
One thought on “FBR Misses Tax Target by Rs864 Billion as Revenue Pressures Mount Ahead of New Budget”
Comments are closed.