ISLAMABAD, September 1, 2026: The Federal Board of Revenue (FBR) collected Rs1.722 trillion during July and August, narrowly exceeding its two-month target of Rs1.71 trillion. However, the modest growth has raised concerns about the authority’s ability to meet the ambitious annual revenue target.

The latest provisional figures show that tax collection increased by Rs55 billion, or 3.3%, compared with the same period last year. The growth rate remains well below the 17.4% increase required to achieve the full-year target.

The government and the International Monetary Fund (IMF) have set the FBR’s annual tax collection target at Rs15.263 trillion for the current fiscal year. The target requires a significant increase over last year’s revenue collection.

The FBR achieved its two-month target mainly because of stronger collection in July. However, the tax authority fell short of its August target by Rs29 billion. Against a monthly target of Rs930 billion, the FBR collected around Rs900 billion.

Income tax remained a major weakness during the period. The FBR collected more than Rs685 billion in income tax, falling Rs74 billion below its two-month target. The figure also declined by Rs29 billion compared with last year, representing negative growth of around 4%.

Sales tax provided the biggest boost to overall collection. The FBR collected Rs719 billion in sales tax, exceeding the target by Rs85 billion. The figure was also 14% higher than last year.

Around Rs496 billion, or 69% of the sales tax collection, came from imports. Recent changes to the tax system require sales tax to be collected at market prices rather than factory-gate prices for several products. The move aims to reduce tax evasion but has also affected the value-added tax chain.

Federal excise duty generated Rs118 billion during the first two months. The collection was almost in line with the target and Rs3 billion higher than the previous year.

Customs duty collection stood at Rs198 billion. The figure remained slightly below the target and was broadly unchanged from the same period last year.

Import-stage taxes continued to account for a significant share of total revenue. More than Rs810 billion, or about 47% of overall tax collection, came from the import stage, where opportunities for evasion are generally lower.

The FBR also issued Rs155 billion in tax refunds during the period. Refund payments increased by around Rs31 billion compared with last year.

The FBR tax collection target remains a key issue under Pakistan’s agreement with the IMF. The government has committed to several revenue and enforcement measures worth more than Rs1 trillion to help the tax authority achieve the annual target.

Tax officials, however, face implementation problems in several areas. These include delays in restricting economic transactions by ineligible taxpayers and difficulties in developing the digital systems needed to enforce the measures effectively.

Ishaq Dar Holds Key Diplomatic Meetings with Iran, China and Other SCO Partners in Bishkek

The FBR has made progress in integrating large retailers into its digital tax network. About 17,337 retailers joined the Point-of-Sale (POS) system during fiscal year 2025-26, representing a 31% increase in the registered base.

However, the FBR has yet to finalise rules required to bring several service-sector businesses into the digital reporting system. A draft Statutory Regulatory Order issued in February 2026 remains non-operational.

The delay has prevented the integration of at least 14 categories of service providers. These include restaurants, hotels, marriage halls, transport companies, courier and cargo services, beauty parlours, clinics, laboratories and other medical service providers.

Tax authorities said businesses must register and connect their electronic invoicing hardware and software with the FBR’s computerised system. However, they cannot complete the process until the required rules are formally notified.

With the annual target set at Rs15.263 trillion, the FBR will need to accelerate collection considerably during the remaining months of the fiscal year. The weak growth recorded in July-August highlights the scale of the challenge facing the tax authority.