ISLAMABAD: The Federal Board of Revenue (FBR) missed its collection target by Rs684 billion during the first 10 months of the current fiscal year, tax officials said, attributing much of the shortfall to disruptions linked to the ongoing Middle East conflict.

Officials said the widening gap between the target and actual collections had become more pronounced over the past two months as the conflict affected trade flows, import volumes and overall economic activity, leading to lower tax receipts, particularly sales tax at the import stage.

In April alone, the impact of the conflict on revenue collection was estimated at around Rs40bn, including a Rs15bn shortfall in gas imports, officials said. They added that this estimate did not factor in austerity measures and a marked slowdown in consumption, which further dampened economic activity and tax receipts.

Further analysis showed that sales tax and federal excise duty collected at the import stage recorded negative growth in April, while withholding tax rose by 4pc and customs duty increased by 9pc. This suggests that, despite stable or slightly higher import values in certain categories, the tax base linked to consumption and excisable goods weakened.

Shortfall widens amid Middle East disruptions

By contrast, domestic sales tax posted relatively stronger performance, rising by about 9pc year-on-year. The data indicate that April’s revenue trends were shaped by subdued consumption and selective import compression. Growth in customs duty and domestic sales tax provided some support, but weakness in import-stage sales tax and excise duty underscored pressure on consumption-led tax streams.

FBR data showed that total collection rose by 10pc to Rs10.262 trillion during July-April FY26, compared with Rs9.295tr in the same period last year. The FBR had set a target of Rs10.946tr for 10MFY26.

In April, collections increased by 13pc to Rs956.3bn from Rs846bn in the corresponding month last year. However, the month’s collection fell short of the target of Rs1.029tr by Rs72.7bn.

The International Monetary Fund (IMF), in its last review, had already revised down the FBR’s annual tax collection target by Rs150bn.

In FY25, the FBR missed its revenue target by nearly Rs163bn even after two downward revisions, collecting Rs11.737tr against the revised target of Rs11.900tr. However, this still reflected a year-on-year growth of 26.19pc over Rs9.301tr in FY24.

The FBR issued Rs499bn in refunds and rebates during 10MFY26, up from Rs431bn in the corresponding period last year, an increase of 15.77pc.

Income tax collection stood at Rs5.084tr during 10MFY26, reflecting a shortfall of Rs210bn against the Rs5.294tr target, though it rose by 14pc compared to Rs4.476tr in the same period last year.

Sales tax collection totalled Rs3.425tr, falling short of the Rs3.808tr target by Rs383bn, but increasing by 8pc year-on-year. Customs duty stood at Rs1.080tr against the Rs1.158tr target, a shortfall of Rs78bn, though it rose by 4pc from Rs1.042tr last year.

Federal excise duty collection reached Rs673bn, below the Rs687bn target, but up 12pc from Rs603bn a year earlier.

Published in Dawn, May 1st, 2026