ISLAMABAD: The Federal Board of Revenue (FBR) is preparing to approach the IMF (International Monetary Fund) with a request to reduce the current fiscal year 2025–26 tax collection target by up to Rs100 billion with the minimum proposed reduction likely to be around Rs50 billion.
According to official sources working papers for the upcoming economic review are being finalized and the proposal has been discussed at the highest government level.
The review will focus on tax performance from July to January in light of inflation and economic growth trends. Prime Minister Shehbaz Sharif has directed the FBR not to impose any new taxes until June 30 and to meet the target without introducing a mini budget.
The FBR has already revised the annual tax target from Rs14.131 trillion approved by the parliament to Rs13.979 trillion under its agreement with the IMF although parliament has yet to formally approve this revised figure. If the IMF agrees to the new proposal the target may be further reduced to Rs13.879 trillion. During July to January FBR collected Rs7.147 trillion against a target of Rs7.521 trillion resulting in a shortfall of Rs372 billion.
Under its commitment with the IMF, the FBR is required to collect Rs9.917 trillion by March 2026, meaning it must raise more than Rs2.765 trillion in the remaining months. Super tax collections are expected to reach between Rs217 billion and Rs220 billion this fiscal year, with nearly Rs175 billion already collected.
Earlier, the FBR had projected up to Rs300 billion in additional revenue following a favourable court ruling on the super tax but it continues to face difficulties in achieving monthly targets.
Tax refunds have also increased with Rs340 billion issued during the first seven months of the current fiscal year compared to Rs314 billion in the same period last year. Overall revenue growth has been recorded at around 12 percent compared to last year’s collection of Rs6.699 trillion in the first seven months.
Officials remain hopeful that increased consumer spending ahead of Eid will help improve sales tax receipts while the final decision on any downward revision in the target will depend on the IMF’s response during the review talks.
