Farooq Awan

Pakistan’s fiscal performance strengthened during the first seven months of the current financial year, with Federal Board of Revenue (FBR) tax collections rising to Rs7.2 trillion, reflecting improved compliance, stronger administration and expanding economic activity.

The country’s tax revenues reached Rs7,177 billion during Jul–Jan FY2025-26, compared with Rs6,497 billion in the corresponding period last year, registering a year-on-year increase of 10.5 percent, according to the Monthly Development Update (February 2026) issued by the Economic Policy Wing of the Ministry of Planning, Development and Special Initiatives.

The steady growth in collections highlights continued progress in revenue mobilisation and the strengthening capacity of the tax administration. The report attributes the increase to broad-based improvements rather than isolated gains, suggesting that the rise is supported by systemic measures.

Monthly data further reinforce the trend. In January alone, tax receipts amounted to Rs1,016 billion, compared with Rs872 billion collected in the same month last year, representing a notable 16.4 percent increase. The stronger monthly performance signals sustained momentum entering the second half of the fiscal year.

The report notes that enhanced compliance, effective enforcement and administrative efficiency have contributed to the improvement. Expanding documentation of economic activity and better monitoring mechanisms have helped widen the tax base and reduce leakages in the system.

Higher collections without abrupt policy changes are generally viewed as an indicator of improved governance within the revenue framework. Strengthened procedures, digitalisation and tighter oversight enable authorities to capture a larger share of economic transactions, supporting more predictable and stable inflows.

Robust revenue mobilisation plays a central role in supporting government finances. Consistent tax receipts provide the fiscal space needed to fund public services, development initiatives and routine operations. Reliable inflows also allow for better budgeting and planning throughout the fiscal year.

The report highlights that strong fiscal outcomes have supported overall macroeconomic stability. Steady growth in revenue reduces pressure on short-term financing and helps maintain balance in public accounts. Sustained improvements in collection efficiency are therefore considered critical to maintaining financial discipline.

The performance during Jul–Jan FY2025-26 suggests that revenue administration reforms are yielding tangible results. Compared with last year, the increase of nearly Rs680 billion underscores the scale of additional resources mobilised through improved systems and compliance.

Maintaining this trajectory will depend on continued enforcement, effective monitoring and broad participation across sectors of the economy. Strengthening institutional capacity remains key to ensuring that revenue gains are sustained over the long term.

With tax collections crossing Rs7.2 trillion in the first seven months, the fiscal outlook reflects steady progress in domestic resource mobilisation, reinforcing the government’s efforts to enhance financial stability and support development priorities.

Credit: INP-WealthPk