ISLAMABAD – The Federal Board of Revenue (FBR) has started the new fiscal year with a positive stride, collecting Rs755 billion in July—exceeding its monthly target of Rs748 billion by Rs7 billion.
This 15% year-on-year growth, or Rs96 billion more than July 2024, came mainly from indirect taxes. While encouraging, the pace still falls short of what’s required to meet the ambitious Rs14.13 trillion annual revenue target set by the government—a 20% increase over last year.
FBR officials attribute the stronger-than-expected performance to improved enforcement and recovery efforts. Sales tax and customs duty collections surpassed targets, but income tax and federal excise duty fell short.
The tax authority collected around Rs300 billion in income tax—Rs15 billion below target, though still 5.6% higher than last year. The shortfall was partially due to advance payments made in June to meet last year’s revised goal. Sales tax brought in Rs302 billion, exceeding the target by Rs12 billion and showing an 18% annual increase.
Excise duty, on the other hand, lagged behind at Rs46 billion—Rs5 billion short. Officials blamed higher duty rates on products like beverages, which dented sales volumes. Customs duty revenue rose sharply to Rs106 billion, beating the target by Rs14 billion and up nearly 31% year-on-year, aided by the clearance of previously withheld shipments.
Despite these gains, the FBR faces growing friction with the business community over controversial tax reforms. Traders have pushed back against new laws that allow arrest on suspicion of sales tax fraud and mandate inclusion of large cash expenses in taxable income. Another sore point is the deployment of tax officers to business premises—a move that critics say contradicts the government’s digitalization goals.
In response, the government formed a high-level committee that recommended easing some of the reforms. Proposals include raising the cash expense threshold to Rs2.5 million and setting up a grievance redressal system. However, the FBR missed its own July 24 deadline to issue clarifying instructions.
Meanwhile, FBR Chairman Rashid Langrial was absent from office this week due to health reasons, though he continued attending virtual meetings. Retired Member Inland Revenue Operations Dr. Hamid Ateeq Sarwar also remained active, as the government is likely to reappoint him on a contractual basis.
While Pakistan’s sluggish economy remains a hurdle—largely due to IMF-mandated stabilization measures—the FBR has managed to keep revenues growing. Still, meeting the full-year target will require not only efficient enforcement but also restoring trust with the business sector.
