Islamabad: The Federal Board of Revenue (FBR) has failed to meet its revenue collection target for the first half (July–December) of the ongoing fiscal year 2025–26, intensifying concerns over the government’s ability to achieve its annual tax goals and prompting consideration of contingency measures.
According to provisional data, the FBR collected PKR 6,154 billion during the first six months of the fiscal year, falling short of the target of PKR 6,490 billion by PKR 336 billion. The shortfall has triggered discussions within the government on activating corrective steps in line with commitments made to the International Monetary Fund (IMF).
In December alone, the FBR collected PKR 1,421 billion against a monthly target of PKR 1,446 billion, resulting in a PKR 25 billion shortfall. The collection was supported by extended banking hours, with banks remaining open until 10pm on the last day of the month to maximise receipts. Despite this, December still recorded a monthly gap, though smaller than in previous months.
The revenue outcome was partly supported by lower refund payments. The FBR issued PKR 38 billion in refunds during December, compared to PKR 72 billion in the same month last year, reflecting a nearly 47% reduction.
Sector-wise performance showed mixed results. Income tax collection reached PKR 3.03 trillion, marking a 9% year-on-year increase but remaining below the target of PKR 3.3 trillion. Sales tax revenue amounted to PKR 2.09 trillion, also below target, though up 10% compared to the previous year. Federal excise duty collections stood at PKR 400 billion, showing an 11% annual increase. Customs duty revenue totalled PKR 642 billion, reflecting an 8% increase year-on-year but still falling short of the target.
To address the revenue gap, the government is reviewing a range of contingency measures. These include increasing federal excise duties on selected goods such as fertilisers and high-value sugary items, expanding the sales tax base by shifting certain products to the standard rate, and raising withholding taxes.
Proposals under consideration include increasing the withholding tax on cash withdrawals for non-filers from 0.8% to 1.5%, raising taxes on mobile phone and landline services, and imposing a 16% federal excise duty on confectionery and biscuits, which is expected to generate PKR 70 billion annually. An increase in withholding tax on cellular calls from 15% to 17.5% could raise an additional PKR 24 billion, while higher taxes on landline connections may generate PKR 20 billion per year.
Officials say the measures are being evaluated to ensure compliance with fiscal commitments while managing the revenue shortfall in the remaining months of the fiscal year.
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