Pakistan eyes Rs15.3 trillion tax target in FY27 budget

Pakistan is expected to set a tax collection target of around Rs15.3 trillion for fiscal year 2026-27, marking an increase of nearly 14% over the downward revised target of Rs13.4 trillion for the current fiscal year, according to a budget preview report issued by Taurus Securities Limited.

The report said the government is likely to rely heavily on stricter enforcement and administrative measures to bridge revenue gaps and meet commitments agreed with the International Monetary Fund.

According to the report, the Federal Board of Revenue recorded a tax shortfall of around Rs683 billion during the first 10 months of FY26, increasing pressure on authorities ahead of the new budget.

Taurus Securities estimated that the federal and provincial governments could introduce around Rs430 billion each in additional revenue measures, with authorities targeting nearly Rs780 billion through enforcement-related collections.

However, the brokerage house noted that the IMF may not fully agree with the government’s reliance on enforcement-based revenue assumptions.

The upcoming budget is also expected to set a fiscal deficit target of 3.5% of GDP and a primary surplus target of 2% of GDP.

On the taxation front, the report said the government may provide limited relief to salaried individuals and businesses while maintaining a “net-zero revenue impact” approach agreed with the IMF.

Proposals under consideration include reducing tax rates across salary slabs, exempting annual income up to Rs1 million from taxation and abolishing the 10% surcharge on high-income earners.

The government is also evaluating a gradual reduction in super tax and a long-term cut in the corporate tax rate to 22%.

Other measures being reviewed include withdrawal of capital value tax and advance tax on exporters, although authorities are reportedly reluctant to remove taxes on inter-corporate dividends.

The report said non-tax revenues are expected to remain heavily dependent on profits from the State Bank of Pakistan and petroleum levy collections.

SBP profits exceeded Rs2.4 trillion in FY26, while petroleum levy revenues crossed Rs1.2 trillion during the first nine months of the current fiscal year, according to the report.

Petroleum levy collections are projected to exceed Rs1.7 trillion in FY27, while the carbon levy on petrol and diesel may rise to Rs5 per litre.

Meanwhile, the federal Public Sector Development Programme allocation for FY27 is expected to be set at Rs1.126 trillion, significantly lower than the Rs2.9 trillion sought by the Ministry of Planning amid fiscal constraints.

The report further said authorities are considering stricter measures against non-filers, including expanded access to banking data and tighter restrictions on property and vehicle purchases to broaden the tax base.

Additional proposals under consideration include a fixed tax scheme for retailers, expansion of the Third Schedule of the Sales Tax Act to additional FMCG products and stricter implementation of digital invoicing systems.