The Federal Board of Revenue (FBR) has surpassed its collection target for the first month of fiscal year (FY) 2025-26, by collecting Rs755 billion in revenues against the monthly target of Rs748 billion. This was reportedly made possible by an improvement in indirect tax collection.

 

Data from reports suggests that the collection figure for the first month of FY 2025-26 was Rs96 billion higher compared to the corresponding period last year. This marks almost a 15 percent improvement in YoY revenue collections.

 

The federal government has set a staggering Rs14.13 trillion revenue target for FY 2025-26, a colossal task for the FBR as the target is 20 percent higher than that set in the previous fiscal year. Reports suggest that the revenue watchdog is utilising enhanced tax enforcement measures along with recouping taxes that have been “tied up in litigation”.

 

While the FBR has surpassed its overall collection target by Rs7 billion, only two sub-targets were met - customs duties and sales tax - while failing to meet the rest, including targets for federal excise duty and income tax.

 

Authorities were able to collect a staggering Rs106 billion in customs duties, a figure Rs14 billion higher than the targeted collection level. Reports indicate that this surge in customs duty collection came about as importers refrained from bringing goods into the country as they expected lower duties in FY 2025-26.

 

Sales tax collections were Rs12 billion higher than the target in place for the first month of FY 2025-26, with total collections reaching Rs302 billion. This marks a YoY increase in sales tax collections of Rs46 billion. 

 

However, reports claim that high duty rates affected company sales for certain products. This strengthens the claim of some members of the business community who believe that the revenue target has been met at their expense.

 

This is because the federal government imposed a tax disallowance, resulting in business owners remaining unable to disallow 50 percent of claimed expenditures on the sales of goods valued over Rs200,000. 

 

Businesses have logged their frustrations against this law via protests in July 2025, as it results in an increase in the taxable income of businesses. Recent reports suggested that this would allow the FBR to witness a boost in revenues, which is exactly what has occurred. 

 

The FBR’s uptick in collection levels, however, has reportedly decreased profit margins for businesses, whose prices and sales volumes have remained unchanged, and who are compliant with taxation laws. The business community has also raised concerns about the presence of FBR’s tax inspectors at business sites, as the federal government claimed it would track production and sales values digitally.