The Federal Bureau of Revenue (FBR) missed its annual tax collection target for Fiscal Year 2024-25 by Rs1.235 trillion. It aimed to collect Rs12.97 trillion but managed only Rs11.735 trillion. The authorities had revised the target twice, first to Rs12.332 trillion, then to Rs11.9 trillion during the 2025-26 budget.
The officials adjusted the targets because of weaker economic performance. The FBR now faces the challenge of collecting Rs14.131 trillion for FY 2025-26 starting July 1, 2025. Since it couldnโt meet even the revised base, the revenue body will need stronger efforts to reach the new goal.
The government will likely reduce spending to meet the IMFโs agreed fiscal deficit levels.
Officials cut projected interest payments from Rs9.7 trillion to Rs8.9 trillion, saving Rs0.8 trillion. The FBR said, โWe ambitiously set the annual tax collection target at Rs12.3tr, which marked a substantial 32% increase compared to the Rs9.3tr we collected during FY 2023-24.โ
They had based this target on a 15% autonomous growth rate for FY25. However, economic activity slowed. Without new policy measures, tax collection would have only reached Rs 10.07 trillion.
The FBR added, โGiven the subdued economic environment and lower than expected autonomous growth, the estimated tax collection for FY25, without any corrective measures, would have been projected to Rs10.07tr.โ
The revenue body clarified, โIf the government had opted for fiscal policies that sustained higher inflation, it would have led to a corresponding increase in interest rates along with an increase in debt repayments.โ
It said such policies would have harmed low-income groups and reduced their purchasing power. โBy maintaining inflation at relatively low levels, the government has provided critical relief to vulnerable segments,โ the statement continued.
To improve collections, the FBR focused on enforcement, administrative efficiency, and new policies. These efforts pushed total tax collection up by 26% compared to last year. The final Rs11.735 trillion includes Rs5.784 trillion in income tax (28% growth), Rs3.9 trillion in sales tax (26%), Rs0.767 trillion in customs duty (16%), and Rs1.284 trillion in customs duty (27%).
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