Abdul Ghani

Federal Board of Revenue (FBR) tax collection recorded a solid increase during the first half of FY2026, rising by 9.5 percent to Rs6.16 trillion in Jul–Dec, reflecting improved revenue mobilisation amid stabilising macroeconomic conditions, according to the Monthly Economic Update and Outlook issued by the Finance Division.

Official figures show that FBR tax receipts reached Rs6,160.8 billion during Jul–Dec FY2026, compared to Rs5,624.9 billion in the corresponding period of last year. The growth in tax revenues was broad-based, with all major tax heads posting positive growth despite easing inflation during the period.

Direct taxes increased by 8.9 percent during the first half of FY2026, indicating improved collection from income and profit-related sources. Sales tax revenues rose by 10.0 percent, supported by higher import volumes and steady domestic economic activity. Federal excise duty (FED) recorded the strongest growth among major tax categories, increasing by 15.6 percent, while customs duty collections rose by 7.4 percent during the period under review.

The Finance Division noted that the improvement in tax collection reflects better compliance, improved enforcement measures, and gradual recovery in economic activity. The stabilisation of inflation and exchange rate conditions also contributed to more predictable revenue flows during the first half of the fiscal year.

Monthly data further highlight the revenue trend. In December 2025 alone, FBR tax revenues amounted to Rs1,427.2 billion, representing an increase of 7.3 percent compared to Rs1,329.9 billion collected in December 2024. The month-on-month performance underscored the continued momentum in revenue mobilisation towards the end of the calendar year.

In addition to tax revenues, non-tax revenues also recorded growth during the period. Non-tax receipts increased by 4 percent during Jul–Nov FY2026, contributing to the overall improvement in gross federal revenues, which rose by 7.8 percent in the first five months of the fiscal year.

The growth in tax revenues played a critical role in strengthening the government’s fiscal position during FY2026. Higher collections helped achieve a consolidated fiscal surplus during Jul–Nov FY2026 and contributed to a sustained primary surplus. Improved revenue performance also reduced reliance on borrowing and helped contain debt servicing pressures.

The Finance Division said maintaining revenue momentum will remain essential for sustaining fiscal discipline and supporting public expenditure priorities. The report emphasised the importance of continuing efforts to broaden the tax base, strengthen enforcement, and improve administrative efficiency to ensure durable gains in revenue mobilisation.

According to the report, stable macroeconomic conditions, including easing inflation and improving industrial activity, are expected to support tax revenues in the remaining months of FY2026. However, the Finance Division cautioned that revenue performance will need to be closely monitored amid global economic uncertainty and domestic demand dynamics.

The sustained increase in FBR tax collection during the first half of FY2026 underscores the role of revenue mobilisation in supporting macroeconomic stability and enabling the government to pursue development and social sector spending within a disciplined fiscal framework.

Credit: INP-WealthPk