ISLAMABAD: Pakistan’s tax collection shortfall has ballooned to Rs833 billion in the first ten months of the current fiscal year (FY24), despite the imposition of record additional taxes and delayed refunds. Federal Board of Revenue (FBR) Chairman Rashid Langrial confirmed that the new fiscal year 2025-26 budget will also be “challenging” in terms of revenue targets, offering little room for tax relief — except to the salaried class.
The FBR collected Rs9.3 trillion in taxes till the end of April, against the annual target of Rs12.97 trillion. The April alone added a Rs139 billion shortfall, breaching Pakistan’s earlier commitment to the International Monetary Fund (IMF) that the shortfall wouldn’t exceed Rs640 billion. The IMF has since acknowledged the annual target is unachievable and revised expectations.
Speaking before the National Assembly Standing Committee on Finance, Langrial admitted both FY24 and FY25 will be tough. Despite Rs1.3 trillion in additional taxes imposed this year, the government still missed targets. “We’re at a tough spot,” Langrial said. “However, we are working on giving tax relief to the salaried class.”
As of March-end, salaried individuals contributed Rs391 billion in taxes — a 56% increase from last year, and 14 times higher than traders’ contributions. Meanwhile, the retail and real estate sectors remain under-taxed.
Milk producers, represented by the Pakistan Dairy Association (PDA), sought relief from the 18% sales tax on packaged milk — one of the highest milk taxes globally — saying it has increased prices by up to Rs70 per litre. The committee backed reducing it to 5%, but Langrial explained the IMF rarely allows tax rate reductions, though the proposal will be considered in the upcoming budget.
Langrial noted that government expenditures are increasing at a 24% pace, even with low inflation. The Prime Minister has expanded the cabinet and approved salary hikes, further straining fiscal space.
For April, the FBR missed its Rs983 billion target, collecting only Rs844 billion despite withholding refunds and taking advance payments. Refunds stood at Rs43 billion for April and Rs428 billion for July–April — just slightly above last year.
The income tax collection crossed Rs4.48 trillion, exceeding the target by Rs325 billion. Sales tax, federal excise duty, and customs duty all missed their respective targets — with sales tax falling short by Rs775 billion.
Meanwhile, the Pakistan Customs Officers' Association denounced public criticism of Customs staff, urging for legal accountability and recognition of their work against smuggling.
