FBR faces four-month deficit of Rs 274 billion, despite record return declarations

• Rs 3.840 trillion raised against a target of Rs 4.109 trillion in FY26.
• IMF emergency taxes planned for January.
• 5.9 million tax returns were submitted, up 17.6%.

ISLAMABAD: The Federal Board of Revenue (FBR) missed its October target, collecting Rs950 billion against a target of Rs1,026 billion, a shortfall of Rs76 billion that pushed the four-month (July-October) gap to Rs274 billion. The News reported on Saturday.

Provisional data showed the first-quarter deficit of Rs198 billion widened by Rs76 billion in October. FBR chairman Rashid Mahmood Langrial said The News on Friday night that October the tally could rise to Rs 952 billion after final adjustments.

In the first four months of FY26, the FBR collected Rs 3.84 trillion against a target of Rs 4.109 trillion, leaving a cumulative gap of Rs 269 billion in these figures.

The government’s annual collection target of 14.13 trillion rupees, which was approved by Parliament, was later revised downwards following the IMF’s second review of the $7 billion Expanded Facility (EFF).

As part of the agreement with the IMF, the government pledged to implement revenue contingency measures from January 1, 2026, if tax collection continues to lag in the first half of FY26 (July-December).

These measures include raising the GST on solar panels from 10% to 18%, increasing taxes on the telecom sector and strengthening the Federal Excise Duty (FED) on fertilizers and pesticides.

The IMF had also proposed a 1% increase in the general VAT rate — from 18% to 19% — but the government rejected it. The Fund also rejected the government’s proposal to impose a flood levy during the second review talks.

Analyzing the October 2025 data, the FBR collected Rs 430 billion in income tax, Rs 345 billion in sales tax on imports and domestic production, Rs 70 billion in federal excise and Rs 109 billion in customs duties. Refund payments stood at Rs 48 billion in October, up from Rs 19 billion in the same month last year.

Regional performance varied between taxa. While Large Taxable Units (LTUs) in Islamabad, Lahore and Karachi underperformed, several regional revenue offices (RTOs) — including Lahore, Karachi RTO-1 and Gujranwala — showed improved results. However, RTOs Sialkot and Faisalabad did not achieve their targets.

Meanwhile, the FBR has announced an extension for filing income tax returns, citing strong involvement of taxpayers. As of October 31, 2025, a record 5.9 million tax returns were filed — up 17.6% from 5 million last year.

Of these, 3.6 million taxpayers filed returns with tax payments, reflecting an 18.6% increase in payment claimants. Individual taxpayers contributed nearly Rs 69 billion, up 15% from Rs 60 billion last year.

The FBR credited this development to compliance with a comprehensive awareness campaign led by the Prime Minister’s Office, the Ministry of Information and the FBR itself.

The campaign used automated calls, WhatsApp messages and behaviorally informed communication pushes to remind citizens of their civic duty. Nearly 800,000 personalized messages and 70,000 targeted emails were sent to encourage timely and accurate tax filing.

The FBR expressed its appreciation for the increasing cooperation of citizens and reaffirmed its commitment to promote a fair, transparent and digital tax system.

While Prime Minister Shehbaz Sharif directed that no general extension be given for filing return, taxpayers facing genuine hardship can apply for extension through FBR’s IRIS system.