Tax target not met, FBR faces Rs610 billion deficit

The Federal Board of Revenue failed to meet its tax collection target in the first nine months of the fiscal year 2025-26, leaving a huge shortfall of Rs610 billion.

According to the documents, the FBR collected about Rs9.3 trillion in revenue from July to March, significantly below the target set by the International Monetary Fund. Tax collections grew by only 10 percent during this period, far below the pace required to meet the annual target.

Officials say tensions in the Middle East have also affected the economy, with a decline of about Rs100 billion in March. The closure of the Strait of Hormuz has affected imports, causing a decline of Rs65 billion, while a further Rs35 billion in taxes has been cut due to reduced production at fertilizer factories due to gas shortages.

Moreover, the FBR issued tax refunds worth Rs447 billion during this period, out of which Rs61 billion were given in March alone, which also increased the pressure on overall collections.

The International Monetary Fund has maintained the annual target of Rs1.398 trillion and has refused to provide further relaxation, due to which the target seems difficult to achieve.

Finance Minister Muhammad Aurangzeb has assured that the government will continue to reform the tax system to improve it, however, according to experts, in the current circumstances, the pressure on revenues is likely to continue in the coming months.