ISLAMABAD: The Federal Board of Revenue (FBR) missed its revenue collection target by Rs612 billion during the first nine months (July-March) of 2025-26, reflecting increasing fiscal pressures on the government exchequer.

Officials attributed the shortfall in revenue collection in March to war-related uncertainties and supply chain disruptions that slowed economic activity, with both customs duty and sales tax registering declines.

The gap is likely to strain public finances, widen the fiscal deficit, and limit the government’s ability to meet expenditure commitments.

The provisional figures showed that gross sales tax was slightly higher than in March last year. However, larger refund payments offset the gains, with total refunds reaching Rs61 billion in March 2026 compared to Rs34bn last year.

Raises Rs9.305tr against Rs9.917tr projection for July-March

Given the war-related uncertainties, higher refunds were issued deliberately to help businesses stay afloat, according to a top tax official.

FBR data showed that the collection recorded a 10pc increase to Rs9.305 trillion during July-March FY26, compared with Rs8.449tr raised in the same period last year.

The FBR had set a revenue collection target of Rs9.917 trillion for 9MFY26.

The March collection grew by 6pc to Rs1,182bn from Rs1,115bn in the corresponding month last year.

However, the collection fell short of the monthly target of Rs1.367tr by Rs185bn. FBR expects to collect an additional Rs2bn to Rs3bn when finalising the collection figures.

The IMF, in its last review, has already revised down the FBR’s annual tax collection target by Rs150bn.

In FY25, the FBR missed its collection target by nearly Rs163bn, even after two downward revisions and raised Rs11.737tr against the revised target of Rs11.900tr. However, the collection reflects a year-on-year growth of 26.19pc from Rs9.301tr in FY24.

The FBR issued Rs447bn in refunds and rebates to taxpayers during 9MFY26, up from Rs386bn a year earlier, an increase of 15.8pc.

Income tax collection reached Rs4.636tr during 9MFY26, recording a shortfall of Rs235bn against the Rs4.871tr target. However, a 12pc increase was recorded compared to Rs4.125tr in the corresponding period last year.

Similarly, the sales tax collection totalled Rs3.104tr, recording a shortfall of Rs313bn against the Rs3.417tr projection, though it marked a 9pc rise over last year’s Rs2.860tr. Customs duty collection stood at Rs956bn, against the Rs1026bn target, resulting in a shortfall of Rs70bn. However, it grew by 3pc compared to Rs927bn last year.

In contrast, the Federal Excise Duty collection reached Rs608bn, surpassing the projected target of Rs603bn and growing by 13pc from last year’s Rs537bn.

Published in Dawn, April 1st, 2026