FBR misses Q1 target by Rs199bn

ISLAMABAD: The Federal Board of Revenue (FBR) fell short of its revenue collection target by Rs199 billion in the first quarter (July-September) of the current fiscal year (FY26), mainly due to lower domestic sales tax receipts and reduced revenue from utility bills.

According to provisional figures released on Tuesday, the FBR collected Rs2.884tr in the first quarter against a target of Rs3.083tr. However, the collection marked a 13 per cent increase from Rs2.558tr collected during the same period last year. The shortfall was most pronounced in September, when revenue collection reached Rs1.228tr-Rs155bn below the target of Rs1.384tr. Despite this, the September figure represented an 11pc increase from Rs1.105tr collected in September FY25.

The decline in domestic sales tax is attributed to multiple factors, including a slowdown in business activity following widespread flooding and a drop in taxable utility consumption. The shift toward solar energy and ongoing power outages have also impacted tax collected through electricity and gas bills.

In the income tax segment, FBR collected Rs1.363tr in the July-September quarter, missing the Rs1.459tr target by Rs96bn. This was 11pc higher than Rs1.225tr collected in the same quarter last year.

Slower sales tax growth, power outages and solar uptake contributed to shortfall despite year-on-year gains

Sales tax collection stood at Rs1.019tr, falling short of its Rs1.141tr target by Rs122bn, though it registered a 13pc year-on-year increase from Rs905bn. Customs duty rose to Rs312bn, surpassing the Rs295bn target by Rs17bn, up 13pc from Rs276bn last year. Federal Excise Duty (FED) reached Rs190bn, exceeding the Rs188bn target and showing a 26pc increase from Rs151bn last year.

Refunds and rebates issued during the first quarter amounted to Rs157bn, compared to Rs147bn a year ago. The FBR has so far received around 4m income tax returns by the end of September.

In the previous fiscal year (FY25), the FBR missed its revised target by Rs163bn, collecting Rs11.737tr against the target of Rs11.9tr. Nonetheless, the collection showed a 26.2pc rise from Rs9.301tr in FY24.

To meet commitments under the IMF programme, the government introduced revenue measures worth Rs1.05tr in the FY26 budget. These include Rs655bn in new taxes and Rs400bn through stricter enforcement. The overall collection target for FY26 has been set at Rs14.131tr.

The budget aims to broaden the tax base, ensure fair burden-sharing, and enforce compliance. Initiatives include digital taxation, carbon levies, and expanded coverage of e-commerce and digital transactions to align with global standards.

FBR expects an additional Rs200bn in super tax next month, which could partially offset the current shortfall.

Published in Brackly News, October 1st, 2025