Government raises FBR allocation by 11% to strengthen tax administration, digitalization and revenue collection efforts
ISLAMABAD: The federal government has allocated Rs85.60 billion to the Federal Board of Revenue (FBR) for the fiscal year 2026-27, increasing funding by 11 percent over the revised allocation for the previous year to support employee salaries, operational activities, digital transformation and tax administration reforms.
According to the federal budget documents, the FBR has been allocated Rs85.604 billion under the functional classification of Executive and Legislative Organs, Financial and Fiscal Affairs, and External Affairs. This compares with the revised allocation of Rs77.018 billion for FY2025-26, while the original budget estimate for that year stood at Rs83.10 billion.
Employee-related spending approaches Rs30 billion
The government has earmarked Rs29.68 billion for employee-related expenses in FY2026-27, up from the revised estimate of Rs28.40 billion in the previous fiscal year.
The allocation includes Rs12.54 billion for employee pay, comprising Rs6.42 billion for officers and Rs6.12 billion for supporting staff. In addition, Rs17.14 billion has been allocated for allowances, including Rs15.49 billion in regular allowances and Rs1.64 billion under other allowance heads.
Operating expenses exceed Rs40 billion
Operating expenses account for the largest share of the budget increase, with Rs40.50 billion allocated for FY2026-27, compared with the revised estimate of Rs32.66 billion in the preceding fiscal year.
The enhanced allocation is expected to support the FBR’s ongoing digitalization drive, tax administration reforms, enforcement initiatives, compliance monitoring, automation projects and other operational activities aimed at improving revenue collection and broadening the tax base.
Higher allocations for pensions and grants
The budget provides Rs1.22 billion for employee retirement benefits, compared with Rs1.06 billion in the revised allocation for FY2025-26.
Funding for grants, subsidies and loan write-offs has also increased substantially to Rs5.57 billion, up from Rs3.43 billion in the previous fiscal year.
Likewise, allocations under transfers have more than doubled to Rs1.05 billion, compared with the revised estimate of Rs436 million.
Spending on physical assets reduced
Despite the overall increase in funding, the government has significantly reduced allocations for physical assets.
Only Rs1.59 billion has been earmarked for physical assets during FY2026-27, down sharply from the revised estimate of Rs4.73 billion and the original budget estimate of Rs6.91 billion for FY2025-26.
Meanwhile, Rs6.00 billion has been allocated for repairs and maintenance, slightly lower than the revised expenditure of Rs6.30 billion recorded in the previous fiscal year.
Focus on stronger tax administration
The increased budget allocation reflects the government’s continued emphasis on strengthening Pakistan’s tax administration through higher operational funding, enhanced digital infrastructure and improved institutional capacity.
The additional resources are expected to help the FBR accelerate digital transformation, strengthen enforcement, improve taxpayer services, expand the tax base and support efforts to achieve the ambitious revenue collection target set for FY2026-27.