FBR misses original FY2025-26 tax target by Rs1.3 trillion

The Federal Board of Revenue (FBR) has failed to achieve its original tax collection target for fiscal year 2025-26, ending the year with a revenue shortfall of Rs1,306 billion

The Federal Board of Revenue (FBR) has failed to achieve its original tax collection target for fiscal year 2025-26, ending the year with a revenue shortfall of Rs1,306 billion against the goal set in the federal budget.

According to official figures, the FBR had originally been assigned a tax collection target of Rs14.131 trillion for FY2025-26. However, by the end of the fiscal year, the tax authority managed to collect Rs12.957 trillion, leaving a gap of more than Rs1.3 trillion compared to the initial target.

Despite missing the original goal, the FBR successfully met the revised revenue target of Rs12.957 trillion, which had been agreed upon by the government and the International Monetary Fund (IMF) during negotiations under Pakistan’s ongoing economic reform programme.

The downward revision in the tax target was made after authorities acknowledged that slowing economic activity, lower-than-expected imports, reduced inflation, and other macroeconomic factors had affected revenue generation throughout the fiscal year. The revised target was considered more realistic in light of prevailing economic conditions.

Officials believe that achieving the IMF-approved revised target is an important milestone, as it demonstrates Pakistan’s commitment to meeting the fiscal benchmarks agreed with the international lender. Maintaining these commitments is expected to strengthen the country’s position in future IMF programme reviews and support efforts to ensure macroeconomic stability.

Tax experts, however, noted that the sizeable shortfall against the original target underscores the need for comprehensive reforms in the country’s tax system. They stressed that broadening the tax base, improving compliance, expanding documentation of the economy, and strengthening enforcement measures remain essential for increasing revenue collection in the coming years.

The government has repeatedly emphasized its intention to reduce dependence on borrowing by enhancing domestic revenue generation. Authorities have also announced plans to accelerate tax reforms, improve digital monitoring, and crack down on tax evasion as part of broader efforts to strengthen Pakistan’s fiscal position.

With the beginning of the new fiscal year, the FBR now faces the challenge of achieving an even higher revenue target while balancing economic growth, business confidence, and compliance with IMF-supported fiscal reforms.