FBR collects Rs967bn in May, missing revised target by Rs28bn

ISLAMABAD: The Federal Board of Revenue collected Rs967 billion in May, falling short of its downward-revised monthly target of Rs994bn by Rs28bn, according to tax officials, as revenue collection remained under pressure from slower economic activity, disruptions linked to the continuing conflict in the Middle East, and the week-long Eidul Azha holidays.

Despite the monthly shortfall, May collections were 7pc higher than the Rs906bn gathered in the same month last year. Officials said the gap between targets and actual collections had widened over the past three months as the regional conflict affected trade flows, import volumes and broader economic activity.

Annual target revised downward

In the last budget, the government had set an FBR revenue target of Rs14.131 trillion. That objective was later revised downward in consultation with the International Monetary Fund to reflect emerging collection gaps. Officials said the annual target has now been cut further to around Rs13tr, implying a gap of more than Rs1tr, while adding that the IMF’s benchmark is lower than the revised projection.

The petroleum levy has meanwhile become a key source of support for the fiscal framework. During the first nine months of FY26, petroleum levy receipts reached Rs1.205tr against a full-year target of Rs1.468tr. Officials said this performance is likely to satisfy the IMF and help offset the tax shortfall during FY26.

In FY25, the FBR missed its collection goal by nearly Rs163bn even after two downward revisions, collecting Rs11.737tr against a revised target of Rs11.900tr. Even so, that total represented year-on-year growth of 26.19pc from Rs9.301tr in FY24.

Eleven-month performance

During the first 11 months of 2025-26, the FBR collected Rs11.232tr against a revised target of Rs11.257tr, leaving a shortfall of Rs25bn. The same period last year had produced collections of Rs10.202tr, meaning receipts this year were up by 10pc. Officials said the remaining gap appeared to be offset through stronger petroleum levy income.

Refunds and rebates issued to taxpayers during 11MFY26 rose to Rs551bn from Rs460bn a year earlier, an increase of 19.78pc.

Tax heads show mixed picture

A breakdown of the data showed differing trends across tax categories. Income tax collection reached Rs5.539tr in 11MFY26, exceeding the downward-revised target by Rs27bn and rising 14pc from Rs4.879tr in the corresponding period last year.

Sales tax receipts stood at Rs3.771tr, which was Rs28bn below the revised target of Rs3.799tr, though still 8pc higher than last year’s Rs3.497tr. Customs duty collection came in at Rs1.178tr against a target of Rs1.205tr, leaving a shortfall of Rs27bn, but remained 2pc above the Rs1.154tr collected a year earlier.

Federal excise duty performed better, reaching Rs745bn against a projected target of Rs741bn. That represented growth of 11pc over last year’s Rs672bn.

Officials said sales tax and federal excise duty collected at the import stage posted only weak growth in May, while withholding tax and customs duty rose only marginally. By contrast, domestic sales tax performed relatively better. The data, they said, pointed to subdued consumption, pressure on consumption-linked tax streams, and selective compression in imports, even as customs duty and domestic sales tax provided some support to overall collections.