ISLAMABAD — Pakistan’s Federal Board of Revenue (FBR) has fallen short of its first-quarter tax collection target by a significant Rs198 billion, raising fresh concerns about the government’s ability to meet conditions agreed with the International Monetary Fund (IMF).
Against the official target of Rs3.083 trillion for July–September, the FBR managed to collect Rs2.885 trillion, according to senior officials. The shortfall also undershot the IMF’s own conservative projection of Rs3.023 trillion by Rs138 billion, highlighting persistent weaknesses in the country’s tax machinery despite multiple reform initiatives, including the heavily funded FBR transformation plan.
Slow Returns Filing
Income tax return filing has also lagged. By the initial September 30 deadline, slightly over four million taxpayers had submitted their returns, out of the 7.7 million filers recorded last year. While this number is about 450,000 higher compared to the same period last year, it still fell far short of expectations.
Along with the returns, the FBR collected Rs80 billion in income tax around Rs18 billion less than what was received by the same date last year. In an attempt to improve compliance, authorities have now extended the filing deadline by 15 days.
Despite measures such as classifying taxpayers into new categories like non-filers and late filers, and even placing restrictions on certain financial transactions, the FBR has struggled to encourage timely submissions.
Collection Breakdown
On a monthly basis, the FBR faced a Rs155 billion shortfall in September alone, collecting Rs1.229 trillion against a target of Rs1.384 trillion. The overall first-quarter collection was Rs328 billion higher than the same period last year a growth of just 13 percent, far below the pace needed to meet annual targets.
The detailed breakdown shows:
- Income Tax: Rs1.363 trillion collected, missing the quarterly target by Rs96 billion but still showing 11% growth over last year.
- Sales Tax: Rs1.02 trillion, falling short by Rs122 billion, though 13% higher year-on-year.
- Federal Excise Duty: Rs190 billion, slightly exceeding the target by Rs2 billion.
- Customs Duty: Rs312 billion, surpassing the target by Rs17 billion, thanks to stronger-than-expected import-related revenues.
Refunds also rose marginally to Rs157 billion, compared to Rs147 billion in the same period of the previous fiscal year.
IMF Concerns
During recent discussions with the IMF, FBR officials admitted that they were likely to miss the target due to delays in court cases, lower-than-expected inflation, and sluggish economic growth. The IMF, however, dismissed the notion that last year’s floods had any lingering impact on revenue collection.
The government has set an ambitious annual revenue target of Rs14.13 trillion for the current fiscal year, requiring nearly 20 percent growth over the previous year. Finance Minister Muhammad Aurangzeb had earlier warned that if enforcement measures were not approved by parliament, the government could be forced to introduce additional revenue steps worth Rs400–500 billion. Although most measures were passed, some were later rolled back after pressure from the business community.
A Persistent Challenge
The FBR’s recurring revenue shortfalls underscore its struggle to deliver on one of the government’s most critical economic goals. With the IMF review underway and fiscal pressures mounting, the coming months will be decisive in determining whether Pakistan can stay on track with its commitments or face another round of tough negotiations.
