ISLAMABAD: As the fiscal year 2024–25 concludes, it has emerged that the Federal Board of Revenue (FBR) fell short of its annual tax collection target by Rs1.235 trillion. Against a target of Rs12.97 trillion, FBR managed to collect Rs11.735 trillion.
The original tax goal was revised downward twice—first to Rs12.332 trillion in February–March 2025, and then again to Rs11.9 trillion during the 2025–26 budget announcement. Despite the reductions, FBR still failed to meet the final target.
Looking ahead, the revenue authority now faces the daunting challenge of collecting Rs14.131 trillion in the fiscal year 2025–26, which begins today (July 1, 2025). Having missed the base target for the outgoing year, FBR will need to significantly ramp up its efforts to meet this ambitious goal.
This shortfall has narrowed the government’s fiscal maneuverability, leaving it with little choice but to control spending in order to meet the fiscal deficit and primary balance requirements agreed upon with the International Monetary Fund (IMF) for June 2025.
The government did, however, achieve some relief by reducing interest payments from the projected Rs9.7 trillion to Rs8.9 trillion, saving around Rs0.8 trillion.
According to a statement from the FBR, the Rs12.3 trillion target had been set with a projected 32% increase over FY 2023–24’s collection of Rs9.3 trillion. The goal was based on an expected autonomous growth rate of 15% in FY25.
However, due to a weak economic environment and lower-than-expected autonomous growth, the estimated collection without intervention was projected to be only Rs10.07 trillion.
The FBR explained that opting for inflationary policies to boost revenue would have placed a heavier burden on low-income households through higher interest rates and increased debt servicing. Instead, the government prioritized keeping inflation in check to protect the purchasing power of the vulnerable population.
Despite the challenges, the FBR highlighted various enforcement and administrative measures taken during the year, which helped push the provisional tax collection to Rs11.735 trillion—reflecting a 26% increase over the previous year.
The breakdown of the provisional collection is as follows:
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Income Tax: Rs5.784 trillion (28% growth)
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Sales Tax: Rs3.9 trillion (26% growth)
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Federal Excise Duty: Rs1.284 trillion (27% growth)
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Customs Duty: Rs0.767 trillion (16% growth)
The revenue body emphasized its ongoing commitment to reform and improve collection efficiency as it enters a more demanding fiscal year.
