The Federal Board of Revenue (FBR) has recorded a tax collection shortfall of Rs1.03 trillion in the first 11 months of the 2024-25 fiscal year, collecting Rs10.21 trillion between July and May against a target of Rs11.24 trillion, which, despite being 28% higher than last year’s Rs8 trillion, remains insufficient to meet the government’s budget goals.
In May alone, the FBR fell Rs205 billion short of its monthly target, even while reducing refund payments by 5.3% compared to last year. May’s tax collection target was Rs1.1 trillion, but the FBR managed Rs907 billion despite advances and slower refunds. Although this represented a 43% increase over last year’s monthly collection, officials warn it remains insufficient to meet overall targets.
This shortfall raises serious questions about the government’s strategy of extracting revenue from already burdened sectors and individuals.
According to a report, a key factor behind the missed target was the failure to recover arrears from ongoing litigation cases, which the FBR and government had promised to resolve swiftly.
The shortfall also exceeds the government’s revised projection made during talks with the International Monetary Fund (IMF) in March, when the target was lowered by Rs640 billion.
Data shows refund payments in May dropped by Rs2 billion compared to the previous year. Total refunds paid in 11 months rose only marginally to Rs458 billion, not reflecting the 28% increase in collections.
The salaried class bore the brunt, contributing Rs437 billion in income tax by April—a 52% rise over last year’s figure.
The IMF’s conditions pushed Pakistan to impose new taxes that heavily affected the salaried class and widened the tax net to nearly all consumer goods, including medical tests, stationery, vegetables, and children’s milk.
While income tax collection reached Rs4.9 trillion—exceeding the target by Rs296 billion—sales tax, federal excise duty (FED), and customs duty fell short. Sales tax revenue stood at Rs3.5 trillion, missing the Rs4.4 trillion target by Rs900 billion, partly due to slower growth in large industries despite heavier tax burdens.
FED collections totaled Rs672 billion, below target by Rs166 billion but Rs180 billion higher than last year. The government expanded FED to items like homes, lubricants, fruit juices, cement, and sugar.
Customs duty revenue was Rs1.16 trillion, short of the Rs1.42 trillion target by Rs265 billion. Collections suffered from lower-than-expected import volumes and manipulation of goods declaration forms by importers in collusion with corrupt officials. Despite this, customs duty revenue increased by Rs172 billion over last year.
