FBR revenue misses target again as may collections fall Rs28bn short

The Federal Board of Revenue (FBR) missed its revised revenue target for May by Rs28 billion, extending a pattern of collection shortfalls that has emerged in recent months amid slowing economic activity and disruptions to regional trade.

Official figures showed the FBR collected Rs967 billion in May against a revised target of Rs994 billion. However, revenue receipts were still 7 per cent higher than the Rs906 billion collected in the same month last year.

The latest performance leaves the tax authority with a cumulative shortfall of Rs25 billion during the first 11 months of FY26. Total collections reached Rs11.232 trillion between July and May compared to a revised target of Rs11.257 trillion. Despite missing the target, revenues were up 10 per cent from Rs10.202 trillion collected during the corresponding period of FY25.

Tax officials said revenue growth has weakened over the past three months as conflict in the Middle East affected trade activity, import volumes and overall economic momentum. The week-long Eidul Azha holidays also reduced business activity and limited collection opportunities during May.

The weaker revenue performance has forced repeated revisions to the government's fiscal projections. The original FY26 tax collection target of Rs14.131 trillion has already been scaled back in consultation with the International Monetary Fund (IMF), with officials now estimating annual collections at around Rs13 trillion. The revised projection is more than Rs1 trillion below the target announced in the federal budget.

While tax collection remains below expectations, non-tax revenues from petroleum products have provided significant support to government finances. Petroleum levy receipts reached Rs1.205 trillion during the first nine months of FY26 against a full-year target of Rs1.468 trillion, helping offset part of the revenue gap.

A breakdown of tax heads showed income tax remained the strongest-performing source of revenue. Collections reached Rs5.539 trillion during the first 11 months of the fiscal year, exceeding the revised target by Rs27 billion and rising 14 per cent from Rs4.879 trillion a year earlier.

Sales tax generated Rs3.771 trillion, falling Rs28 billion short of the revised target of Rs3.799 trillion. Nevertheless, collections were 8 per cent higher than the Rs3.497 trillion recorded in the same period last year.

Customs duty receipts stood at Rs1.178 trillion against a target of Rs1.205 trillion, resulting in a shortfall of Rs27 billion. Growth remained modest at 2 per cent compared to last year's collection of Rs1.154 trillion.

Federal Excise Duty (FED) was the only major tax head to outperform expectations. Collections reached Rs745 billion against a target of Rs741 billion, marking an 11 per cent increase over the Rs672 billion collected during the corresponding period of FY25.

Revenue data also pointed to weakness in consumption-linked taxes. Sales tax and federal excise duty collected at the import stage posted limited growth, reflecting subdued demand and slower import activity. Domestic sales tax showed comparatively stronger performance, while customs duties and withholding taxes registered only marginal increases.

Meanwhile, the FBR paid Rs551 billion in refunds and rebates during July-May FY26, up nearly 20 per cent from Rs460 billion paid during the same period last year.

The latest figures follow a similar outcome in FY25, when the FBR collected Rs11.737 trillion against a revised target of Rs11.900 trillion, missing the goal by nearly Rs163 billion despite two downward revisions. Even so, revenue collection during FY25 recorded annual growth of 26.19 per cent over the Rs9.301 trillion collected in FY24.