ByMeta Description: FBR missed its January tax target by Rs84bn, pushing the seven-month shortfall to Rs468bn. Revenue growth is expected to improve in the final quarter.
The Federal Board of Revenue (FBR) has provisionally collected Rs872 billion in January 2025, missing its target of Rs956 billion by Rs84 billion. This shortfall contributes to a cumulative revenue gap of Rs468 billion for the first seven months (July-January) of the fiscal year 2024-25. According to sources, the FBR collected Rs6,496 billion during this period against the assigned target of Rs6,964 billion, reflecting ongoing challenges in meeting revenue expectations.
Expected Revenue Growth in Final Quarter
Despite this shortfall, officials remain hopeful that revenue collection will improve in the final quarter of the fiscal year, mitigating further losses. The FBR anticipates an uptick in revenue collection in March 2025, aided by an expected increase in palm oil imports, which could boost import-related duties and narrow the revenue gap.
IMF’s Quarterly Revenue Assessment
The International Monetary Fund (IMF) evaluates tax collection on a quarterly basis rather than monthly. The revenue collection target for the January-March quarter stands at Rs3,150 billion, and FBR officials express confidence that increased economic activity in March will contribute to meeting this goal.
Revenue Shortfall in the First Half of FY 2024-25
The first half of the fiscal year 2024-25 saw a cumulative shortfall of Rs386 billion. On Thursday, FBR Chairman Rashid Mahmood Langrial informed the Senate Standing Committee on Finance that this shortfall was primarily due to lower-than-expected autonomous growth, attributed to exchange rate stability, lower inflation, and sluggish GDP and manufacturing sector growth.
Projections and Policy Adjustments
Langrial projected that the shortfall could reach Rs447 billion by February 2025 but maintained optimism that revenue growth would accelerate in the final four months of the fiscal year, helping to prevent further losses. He acknowledged that policy measures introduced in the Finance Act 2024, which were expected to generate Rs1.3 trillion, had underperformed due to behavioral shifts among real estate investors and traders, as well as estimation errors.
Improvement in Tax-to-GDP Ratio
Despite the revenue shortfall, the tax-to-GDP ratio has shown improvement, rising from 9.5 percent in the first quarter to 10.8 percent in the second quarter. However, it remains below the IMF’s target of 13.6 percent by the end of the program. The FBR continues to work toward enhancing revenue collection through policy adjustments and administrative measures to bridge the gap in the remaining months of the fiscal year.
