Islamabad, November 26, 2024 – Political instability is posing significant challenges for the Federal Board of Revenue (FBR) in achieving its tax collection target for November 2024, according to sources within the department.
The Pakistan Tehreek-i-Insaf (PTI) has launched protests this month to push for their demands, further disrupting the economic landscape and complicating the FBR’s efforts to meet revenue goals.
The FBR is already struggling to achieve its annual tax collection target, and the ongoing political uncertainty has exacerbated the situation. For November 2024, the FBR aims to collect Rs1 trillion but has so far managed only Rs550 billion as of November 25, 2024. Meeting the target seems unlikely without implementing additional taxation measures or a mini-budget.
Despite the revenue shortfall, the government has reiterated its commitment to avoiding a mini-budget for generating additional revenue in the fiscal year’s second quarter.
In response to an anticipated shortfall of Rs230 billion for the October-December 2024-25 quarter, the FBR has initiated short-term measures. These include issuing notices to 5,000 high-net-worth non-filers in the first phase, with an estimated tax liability of Rs7 billion.
In October 2024, the FBR collected Rs877 billion against a target of Rs980 billion, resulting in a shortfall of Rs103 billion. For the first four months of 2024-25, total collections stood at Rs3,440 billion, falling short of the Rs3,636 billion target by Rs196 billion.
The FBR attributes these shortfalls to shifting economic assumptions, including revised GDP growth rates, import levels, inflation, and large-scale manufacturing output. To address the deficit, the FBR has planned a mix of short- and long-term measures, including enforcement actions projected to generate Rs320 billion.
Contingency revenue measures agreed upon by the government include increasing federal excise duty (FED) on sugary drinks and raising withholding tax rates on machinery and raw material imports, as well as on contracts and services. These measures are expected to yield Rs10.8 billion per month, contributing an estimated Rs97.2 billion over the remaining three quarters of the fiscal year.
The FBR remains under pressure to meet its ambitious targets amid an evolving economic and political environment.
