Abdul Ghani

The Federal Board of Revenue (FBR) has reported a remarkable 114% increase in tax revenues during the July–December 2025 period, reaching Rs6,160.8 billion, according to a document available with Wealth Pakistan.

This represents a sharp rise compared to Rs2,884 billion recorded during July–September 2025, reflecting the government’s continued efforts to broaden the tax base and strengthen revenue collection mechanisms.

The growth was largely driven by a strong increase in sales tax, direct taxes and customs duties. Sales tax collections surged significantly, indicating improved economic activity and better tax compliance. Direct taxes also posted substantial gains, while customs duties rose in line with higher trade volumes.

Meanwhile, non-tax revenues increased to Rs3,799.5 billion from Rs2,984.5 billion in the July–September period. The rise in non-tax revenue was mainly supported by higher surplus profits transferred by the State Bank of Pakistan and increased collections from petroleum levies.

Despite the impressive revenue performance, the federal government’s total expenditure expanded by 137%, climbing to Rs9,591.1 billion from Rs4,047 billion in July–September 2025.

The surge in spending was primarily attributed to a 159% increase in mark-up payments on domestic and external debt, highlighting the mounting pressure on fiscal sustainability.

Although the strong revenue growth is encouraging, effective expenditure management — particularly controlling debt servicing costs — remains critical for long-term fiscal stability. Striking a balance between expanding revenues and containing rising expenditures will be essential to maintaining economic growth.

Credit: INP-WealthPk