FBR Faces Rs274 Billion Revenue Gap Despite Record Number of Tax Filers
ISLAMABAD, October 2025 — Pakistan’s Federal Board of Revenue (FBR) is facing a serious challenge as it missed its tax collection target by Rs274 billion in the first four months of the fiscal year 2025–26 — even though a record number of people filed their income tax returns this year.
Four-Month Performance Overview
According to provisional figures, the FBR collected Rs950 billion in October against its target of Rs1,026 billion, creating a shortfall of Rs76 billion for the month.
Cumulatively, FBR’s collection from July to October 2025 stood at Rs3.84 trillion, compared to the target of Rs4.11 trillion. FBR officials, however, expect the figure to slightly rise to Rs952 billion once final reconciliations are completed.
What’s Behind the Shortfall
Pakistan’s annual tax collection target for FY2025–26 was originally set at Rs14.13 trillion but was later adjusted during the IMF’s second review of the $7 billion Extended Fund Facility (EFF).
Under this program, the government has pledged to take new revenue measures from January 2026 if the gap in collections continues. These may include:
• Increasing GST on solar panels from 10% to 18%,
• Raising taxes on the telecom sector,
• Applying higher FED rates on fertilizers and pesticides.
However, both the IMF’s proposal to raise the general GST rate from 18% to 19% and the government’s suggestion of a flood levy were rejected for now.
Breakdown of Tax Collections
In October, FBR’s tax collection was divided as follows:
• Income Tax: Rs430 billion
• Sales Tax: Rs345 billion
• Federal Excise Duty (FED): Rs70 billion
• Customs Duty: Rs109 billion
Meanwhile, refund payments surged to Rs48 billion in October — more than double the Rs19 billion released during the same month last year.
Mixed Performance Across Regions
The performance of tax offices varied across the country.
While some RTOs, such as Karachi RTO-I, Lahore, and Gujranwala, exceeded expectations, several Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) in Faisalabad and Sialkot failed to meet their set targets.
Submissions of Breakthrough Tax Returns
On the plus side, FBR delivered more returns than ever before.
Through October 31, 2025, 5.9 million taxpayers had filed their returns, up 17.6% from the 5 million who did so the year before.
Of these, 3.6 million returns were filed with tax payments, reflecting an 18.6% increase in paying filers.
Individual taxpayers alone contributed around Rs69 billion, up 15% year-on-year.
How FBR Increased Compliance
This improvement came about after a countrywide awareness campaign was organized in collaboration with the Ministry of Information, FBR, and the Prime Minister’s Office.
Tools of modern communication-robocalls, e-mail reminders, WhatsApp alerts, and personalized behavioral messages-were used in a quest to get the taxpayer to file on time.
Over 800,000 customized messages and upwards of 70,000 targeted emails were sent to ensure timely compliance.
The Road Ahead
FBR officials have appreciated the growing public cooperation and have reaffirmed their commitment to creating a fair, transparent, and digital tax system.
The government has also issued a directive that no blanket extension of time for filing tax returns will be given, though genuinely affected persons may still file for an individual extension on the IRIS portal.
Final Thoughts
Although the shortfall faced by FBR shows that tax collection remains a challenge, the record rise in filers depicts a positive augury toward the improvement of a more compliant and stronger tax culture in Pakistan.
The months ahead will be crucial as the government works to close the revenue gap while balancing inflation, growth, and fairness for taxpayers.