ISLAMABAD: The Federal Board of Revenue (FBR) fell short of its revised tax collection target for the first half of FY2025–26 by Rs330 billion—a smaller gap than earlier projections—reducing the immediate likelihood of a mini-budget that could have impacted users of solar panels, smartphones, and other services.
Provisional figures show FBR collected Rs6.16 trillion from July to December, Rs545 billion below the original target but better than the Rs564 billion shortfall previously forecast in briefings to the Prime Minister.
The narrower gap eases pressure on the government to introduce additional tax measures in January. However, a mini-budget remains a possibility under IMF commitments.
Revenue in December was bolstered by Rs391 billion collected on the last day after banks remained open until 10pm. Refunds issued in December totaled Rs38 billion, down 47% from last year. Despite these efforts, FBR missed the monthly target by Rs20 billion, though the shortfall was smaller than in previous months.
Tax collection for the first six months rose 10% year-on-year, below the pace required to meet the nearly Rs14 trillion annual target. During an IMF programme review, the Fund reduced FBR’s annual target by Rs214 billion due to lower inflation, slower growth, and flood impacts. Both sides agreed additional tax measures of at least Rs200 billion would be introduced if slippages widened.
Potential measures discussed with the IMF include raising sales tax on solar panels, increasing withholding tax on cash withdrawals by non-filers from 0.8% to 1.5%, hiking taxes on mobile and landline usage, and extending federal excise duty to confectionery and biscuits. The proposals could generate substantial revenue: Rs20 billion from higher landline withholding, Rs24 billion from cellular calls, and Rs70 billion from excise duty on sweets and biscuits.
Data shows income tax collection reached Rs3.03 trillion (against a target of Rs3.3 trillion), sales tax at Rs2.09 trillion, federal excise duty at Rs400 billion, and customs duties at Rs642 billion.
Meanwhile, exporters expressed concerns over FBR’s instructions to scrutinise income tax returns following amendments to export taxation rules. Pakistan Retail Business Council Chairman Ziad Bashir warned the move could strain relations between businesses and the government, noting that high tax rates, energy costs, and financing challenges already burden the export sector.
FBR management stressed that exporters will not be targeted arbitrarily and cases selected for review will be carefully monitored to avoid undue hardship.
