PTBP Web Desk
The Federal Board of Revenue (FBR) is grappling with a deepening revenue crisis as it missed the tax collection target for May 2025 by a wide margin. According to official figures, the FBR provisionally collected Rs 904 billion during the month of May against an assigned monthly target of Rs 1110 billion, resulting in a shortfall of Rs 206 billion.
This significant gap has added to an already widening fiscal shortfall, bringing the cumulative revenue deficit for the first eleven months of the fiscal year 2024-25 to Rs 1027 billion. From July 2024 to May 2025, the FBR managed to collect Rs 10,213 billion, falling short of the revised target of Rs 11,240 billion.
The situation has worsened progressively over the course of the fiscal year. During the July-March 2024-25 period, the shortfall stood at Rs 703 billion. This increased to Rs 821 billion by the end of April 2025, and has now ballooned to Rs 1027 billion as of the end of May 2025.
The monthly revenue data paints a troubling picture of the government’s ability to meet its budgetary commitments, particularly when only one month remains in the current fiscal year.
In order to meet the revised annual target of Rs 12,334 billion, the FBR must now collect Rs 2121 billion in June 2025 alone—an amount that is widely considered unrealistic under current economic conditions. Comparatively, even in the most productive months, the FBR has not come close to this level of monthly collection.
This means that unless a sudden and extraordinary surge in tax revenue is achieved in June, the final fiscal shortfall could well exceed the current Rs 1027 billion mark.
Initially, the government had set an ambitious tax revenue target of Rs 12,913 billion for the fiscal year 2024-25. However, recognizing the challenging ground realities—sluggish economic growth, inflationary pressures, and underperforming sectors—the target was revised downward to Rs 12,334 billion.
Despite this revision, the FBR has struggled to stay on course. With just one month remaining, the chances of meeting even the revised figure are slim unless extraordinary revenue mobilization steps are implemented immediately.
Several key factors have contributed to the revenue shortfall this fiscal year:
• Economic slowdown in major sectors like manufacturing and retail has affected tax collection, especially sales tax and income tax.
• A rise in informal sector activity, often outside the scope of formal tax enforcement.
• Limited success in expanding the tax base, with non-filers continuing to evade the system.
• Smuggling and under-invoicing at the import stage, resulting in loss of customs and regulatory duties.
• Weak enforcement of withholding tax provisions and underutilization of digital tracking systems.
The growing gap between actual and targeted tax collection is likely to draw scrutiny from key stakeholders, including international lending agencies like the IMF. The government is already under pressure to enhance tax reforms, broaden the tax base, and improve compliance mechanisms.
In recent months, the FBR has floated multiple proposals aimed at strengthening revenue collection. These include doubling the withholding tax on cash withdrawals by non-filers, as well as restricting financial transactions of those not on the Active Taxpayer List (ATL) from July 2025 onward.
If implemented effectively, such measures could help improve long-term compliance and documentation of the economy, though they may not provide immediate relief in meeting the current year’s targets.
