FBR faces Rs274bn four-month shortfall despite record return filings

• Rs3.840tr collected against Rs4.109tr goal in FY26.
• IMF contingency taxes slated for January.
• 5.9 million tax returns filed, up 17.6%.

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

Provisional data show the first-quarter shortfall of Rs198 billion widened by Rs76 billion in October. FBR Chairman Rashid Mahmood Langrial told The News on Friday night that October’s tally could edge up to Rs952 billion after final adjustments.

Over the first four months of FY26, the FBR has raised Rs3.84 trillion against a target of Rs4.109 trillion, leaving a cumulative gap of Rs269 billion on these figures. 

The government’s Rs14.13 trillion annual collection target, approved by Parliament, was later revised downward following the IMF’s second review of the $7 billion Extended Fund Facility (EFF).

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

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

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

Breaking down the October 2025 figures, the FBR collected Rs430 billion in income tax, Rs345 billion in sales tax on imports and domestic production, Rs70 billion in Federal Excise Duty, and Rs109 billion in customs duty. Refund payments amounted to Rs48 billion in October, up from Rs19 billion in the same month last year.

Regional performance varied across tax offices. While the Large Taxpayer Units (LTUs) in Islamabad, Lahore, and Karachi underperformed, several Regional Tax Offices (RTOs) — including Lahore, Karachi RTO-1, and Gujranwala — showed improved results. However, Sialkot and Faisalabad RTOs fell short of their targets. 

Meanwhile, the FBR announced an extension for filing income tax returns, citing strong taxpayer engagement. As of October 31, 2025, a record 5.9 million tax returns were filed — a 17.6% increase from last year’s 5 million. 

Out of these, 3.6 million taxpayers filed returns with tax payments, reflecting an 18.6% rise in paying filers. Individual taxpayers contributed nearly Rs69 billion, up 15% from Rs60 billion last year.

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

The campaign utilised robocalls, WhatsApp messages, and behaviorally informed communication nudges to remind citizens of their civic duty. Nearly 800,000 personalised messages and 70,000 targeted emails were sent to encourage timely and accurate tax filing.

The FBR expressed appreciation for citizens’ growing cooperation and reaffirmed its commitment to promoting a fair, transparent, and digital tax system. 

While Prime Minister Shehbaz Sharif has directed that no blanket extension be granted for return filing, taxpayers facing genuine hardships may apply for an extension through the FBR’s IRIS system.