FBR’s early warning

September 2, 2026

The Federal Board of Revenue (FBR) has narrowly exceeded its tax collection target for the first two months of the current fiscal year, but the figures also raise serious questions about its ability to meet the much larger annual target.

The FBR collected Rs1.722 trillion in July and August, slightly above its two-month target of Rs1.71 trillion. This is certainly a positive development. However, tax collection grew by only 3.3% compared with the same period last year. This is far below the 17.4% growth needed to achieve the ambitious annual target of Rs15.263 trillion.

This gap should concern the government and economic managers. Meeting a target for two months by a narrow margin is not enough if the overall pace of growth remains weak.

The performance of different taxes also presents a mixed picture. Sales tax collection increased by 14%, exceeding its target. However, income tax collection declined by 4% and fell Rs74 billion short of the target. This weakness is particularly worrying because income tax is an important source of government revenue.

Another important concern is Pakistan’s heavy dependence on taxes collected at the import stage. Almost half of the total tax collection came from imports, where tax evasion is relatively easier to control. However, this is not a sustainable solution for a country that needs to expand its domestic economy and tax base.

The FBR has introduced new enforcement measures and expanded its Point-of-Sale system to bring more large retailers into the formal tax network. These are welcome steps. Yet political interference and delays in developing effective digital systems continue to weaken tax enforcement.

The government cannot depend forever on indirect taxes and import-based collections. It must improve direct taxation and ensure that wealthy individuals, businesses and untaxed sectors contribute their fair share.