FBR faces Rs468bn shortfall in seven months

ISLAMABAD: The Federal Board of Revenue (FBR) faces a massive revenue shortfall of Rs468 billion in the first seven months (July-Jan) period of current fiscal year as the tax machinery fetched Rs6,496 billion against the assigned target of Rs6,964 billion.

The revenue shortfall continues to widen further with passage of every month as the provisional collection figure for January 2025 shows that the FBR has made a collection of Rs872 billion against the desired target of Rs956 billion. With revenue collection of Rs872 billion, the FBR has achieved growth of 29 percent month on month basis.

In the first half (July-Dec) period the revenue shortfall stood at Rs384 billion so it has widened further with a shortfall of Rs84 billion in January 2025, and the overall shortfall in the first seven months escalated to Rs468 billion.

This revenue collection shortfall becomes immensely important keeping in view the upcoming IMF’s review mission for holding parleys with Pakistani authorities by the end of February or March 2025. It is yet to see how the IMF responds to the FBR’s slippages.

However, Ministry of Finance high-ups argued that the overall fiscal framework has remained aligned mainly because of reduction in debt servicing in the wake of reduced policy rates coming down from 22 percent to 12 percent with six consecutive reductions. It has reduced the woes of the economic managers but the IMF would raise the issue of revenue shortfall occurring on the FBR fronts.

Under the IMF programme’s indicative target, the FBR’s indicative target for March 2025 has been envisaged at Rs9,168 billion. Now the FBR requires a whopping collection of Rs2,772 billion in next two months (Feb and March) for materialising the agreed target with the Washington-based lender.

Pakistan and the IMF have envisaged an annual tax collection target of Rs12,970 billion (Rs12,913 billion agreed with the IMF) for the current fiscal year. Keeping in view a collection of Rs6,496 billion in the first seven months, the FBR will have to collect Rs6,474 billion in the remaining five months (Feb to June) 2025 for displaying the desired target of Rs12,970 billion on June 30, 2025.

The FBR has not yet released any official provisional revenue collection figures for January 2025. The revenue collection stood at Rs800 billion a couple of days ago but the collection gained momentum and it reached to Rs872 billion till January 31, 2025. It is expected that a few billions more may come into national kitty and the collection might touch Rs875 billion for January 2025. The FBR had paid out refunds of Rs272 billion in the first six months of the current FY. After striking a deal with banks, the FBR collected Rs72 billion on their profits during the current fiscal year after promulgation of an ordinance for fixing rate of 44 percent in current fiscal year on their profits.