Strong sales tax receipts help FBR beat its July revenue target despite lower-than-expected income tax collections, providing a solid start to FY2026-27.
ISLAMABAD: The Federal Board of Revenue (FBR) collected more than Rs810 billion in taxes during July 2026, surpassing its monthly revenue target and providing a strong start to fiscal year 2026-27, although income tax receipts fell short of expectations.
According to provisional figures, the FBR collected Rs810 billion during the first month of the fiscal year, exceeding the monthly target by Rs30 billion. The collection also represented a 7% increase compared with Rs757 billion collected in July 2025.
The revenue performance was driven primarily by robust sales tax receipts, while customs duty and federal excise duty also met or slightly exceeded their respective targets.
Annual target set at Rs15.263 trillion
For FY2026-27, the federal government, in consultation with the International Monetary Fund (IMF), has set an annual tax collection target of Rs15.263 trillion.
Achieving the target requires the FBR to increase tax revenues by around 17% over the previous fiscal year’s collection.
Unlike previous years, meeting the revenue target has become a key benchmark under Pakistan’s IMF-supported economic reform programme. The release of the programme’s sixth loan tranche depends on the FBR meeting its revenue objectives during the first half of the fiscal year.
Income tax falls short of target
Despite exceeding the overall revenue target, income tax collection remained below expectations.
The FBR collected more than Rs300 billion in income tax during July, missing the monthly target by Rs23 billion.
The shortfall in direct tax collection was compensated by stronger-than-expected performance in sales tax and other indirect taxes.
Sales tax leads revenue growth
Sales tax remained the largest contributor to the FBR’s July revenue collection.
The tax authority collected Rs358 billion in sales tax, exceeding the monthly target by Rs53 billion and recording an 18% year-on-year increase.
However, import-stage taxation continued to account for the bulk of sales tax receipts. Around Rs275 billion, or 78% of total sales tax collection, was generated on imported goods.
Customs duty and FED achieve targets
The FBR collected Rs105 billion in customs duty during July, meeting its monthly target and exceeding the collection recorded in the corresponding month last year by Rs2 billion.
Meanwhile, Federal Excise Duty (FED) collection reached Rs48 billion, marginally surpassing the target and remaining broadly in line with July 2025 levels.
Import-stage taxes remain the backbone
The provisional figures show that more than Rs440 billion, representing approximately 54% of total tax collection, was generated at the import stage, where compliance levels are generally higher and tax evasion is comparatively limited.
The figures underscore the FBR’s continued reliance on import-related taxation despite ongoing efforts to broaden the domestic tax base and improve direct tax collection.
Return filing gathers pace
Following the upload of revised income tax return forms to its online portal, the FBR received approximately 227,000 income tax returns during July.
The tax authority also accelerated the payment of tax refunds, disbursing Rs98 billion during the month—around Rs13 billion more than the amount refunded in July last year.
The July revenue performance provides an encouraging start to FY2026-27, but sustaining the required pace of revenue growth throughout the year will be essential for achieving the Rs15.263 trillion annual target and fulfilling Pakistan’s commitments under the IMF-supported reform programme.