ISLAMABAD: The Federal Board of Revenue (FBR) achieved its tax collection target for the first two months of the fiscal year. Provisional figures show that the FBR collected Rs1.722 trillion during July and August. The amount exceeded the Rs1.71 trillion target by Rs12 billion.
However, revenue growth remained below the level required to meet the annual target. The latest collection was only 3.3% higher than the same period last year. The government has set an annual tax collection target of Rs15.263 trillion. Meeting this target requires revenue growth of 17.4% during the fiscal year.
Sales Tax Boosts FBR Collection
Higher sales tax receipts helped the FBR meet its two-month target. The authority collected Rs719 billion in sales tax, exceeding its target by Rs85 billion. Sales tax revenue also increased by 14% compared with the previous year. Around 69% of this collection came from imports.
In contrast, income tax collection remained weak. The FBR collected more than Rs685 billion in income tax, falling Rs74 billion short of its two-month target. Income tax revenue also declined by Rs29 billion compared with last year. This represented negative growth of around 4%.
Federal excise duty generated Rs118 billion, while customs duty collection stood at Rs198 billion. Both categories remained close to their respective targets.
Meanwhile, the FBR issued Rs155 billion in tax refunds. The amount was around Rs31 billion higher than the previous year.
Enforcement Measures Face Delays
The FBR continues to face challenges in implementing its tax enforcement measures. Officials said restrictions on economic transactions by ineligible persons have faced delays. The authority has also made progress in integrating large retailers into the tax system. More than 17,300 retailers joined the Point-of-Sale network during fiscal year 2025-26.
However, the integration of several service providers remains pending. The FBR has yet to finalise rules required to connect 14 categories of service providers with its digital reporting system. These include restaurants, hotels, marriage halls, courier companies, beauty parlours and medical service providers.
Tax authorities said businesses also need to install electronic invoicing systems. However, the process cannot move forward until the required rules are formally notified.
The slow pace of revenue growth therefore remains a major challenge for the FBR. The authority will need stronger collection and enforcement measures to stay on track for its ambitious annual target.
