The Federal Board of Revenue (FBR) missed its revenue collection target for FY25 by nearly Rs178 billion, despite two downward revisions to the target of Rs11.9 trillion. This shortfall was primarily due to slow economic growth and a decline in imports, which impacted sales tax collections.
Provisional figures show the FBR collected Rs11.737 trillion, falling short of the revised target of Rs11.9 trillion. However, this marks a 26.19% year-on-year increase from Rs9.301 trillion in FY24.
The government initially set a revenue target of Rs12.913 trillion for FY2024-25, which was later revised to Rs12.33 trillion, and then further reduced to Rs11.9 trillion, reflecting a cumulative downward revision of over Rs1 trillion to address fiscal gaps.
The final budgetary shortfall stands at Rs1.176 trillion, but after the downward revisions, the gap narrowed to Rs178 billion.
In June, the FBR collected Rs1.499 trillion, missing the monthly target of Rs1.664 trillion by Rs166 billion. However, June’s collection was 26% higher than Rs1.190 trillion collected in the same month last year, with a few billion rupees expected in the coming days.
Despite imposing new taxes and increasing the petroleum levy to a record Rs78 per liter, the government couldn’t close the gap. The tax-to-GDP ratio remained slightly over 10%, missing the commitment made to the International Monetary Fund (IMF) to increase it to 10.6%.
Factors contributing to the shortfall included lower tax receipts from imports, subdued manufacturing activity, and a sharp decline in inflation, which dropped to a record 0.3% in recent months.
The government was also unable to meet its commitments for income tax collection from the Tajir Dost Scheme, falling far below the target of Rs50 billion.
Income tax collection for FY25 reached Rs5.781 trillion, falling short by Rs42 billion against the target of Rs5.823 trillion, marking a 28% increase from Rs4.531 trillion collected last year.
Sales tax collection amounted to Rs3.90 trillion, missing the Rs3.969 trillion target by Rs69 billion, though it showed a 26% increase over last year’s Rs3.089 trillion.
Customs duty collection stood at Rs1.284 trillion, falling short of the Rs1.350 trillion target by Rs66 billion, but it grew by 16% compared to Rs1.104 trillion last year.
The Federal Excise Duty (FED) collection surpassed its target, reaching Rs767 billion, against the projected Rs759 billion, reflecting a 33% increase from last year’s Rs577 billion.
During the year, the FBR issued Rs493 billion in refunds, up from Rs480 billion last year. Refunds for June stood at Rs33 billion, compared to Rs27 billion in June 2024.
The IMF’s pressure for new taxes, particularly on the salaried class and essential goods, contributed to the government’s tax policies. Despite these measures, tax collection remains below the required levels for fiscal sustainability.
For the fiscal year 2025-26, the government has set a new target of Rs14.13 trillion, requiring a 20% growth in tax collection.Â
