Pakistan’s tax collection rises to Rs3.09 trillion, but the expanding economy pushes the Federal Board of Revenue’s tax-to-GDP ratio lower year-on-year.

Pakistan’s tax-to-GDP ratio declined to 2.1% during the first quarter of fiscal year 2026-27, compared with 2.27% in the corresponding period last year, highlighting challenges in improving revenue mobilisation.

According to data released by the Ministry of Finance, the Federal Board of Revenue (FBR) collected Rs3.086 trillion during July-September 2026, against Rs2.884 trillion in the same period of FY2025-26.

Despite the increase in tax receipts, the ratio declined as the country’s gross domestic product (GDP) expanded to Rs143.61 trillion from Rs126.87 trillion a year earlier.

Direct tax collection increased to Rs1.440 trillion during the first quarter, compared with Rs1.364 trillion in the corresponding period last year.

Meanwhile, indirect tax receipts rose to Rs1.646 trillion from Rs1.520 trillion.

Within indirect taxation, sales tax collection increased to Rs1.137 trillion from Rs1.019 trillion, while customs duty revenue reached Rs312.17 billion compared with Rs310.58 billion.

Federal excise duty collections also increased to Rs197.27 billion from Rs190.49 billion.

The figures indicate that higher tax collection has not translated into an improved tax-to-GDP ratio, as economic growth outpaced the increase in FBR revenue.

The declining ratio underscores the government’s continuing challenge of broadening the tax base and strengthening revenue collection.