Pakistan may face PKR 200 billion tax shortfall in March

Pakistan’s tax collection may fall short by up to PKR 200 billion in March, as authorities struggle to meet targets amid slowing economic activity and regional tensions, according to officials familiar with the matter.

The Federal Board of Revenue (FBR) faces difficulties in achieving its monthly tax target of PKR 1,367 billion, with sources indicating a significant revenue gap.

Officials said heightened geopolitical tensions and war-like conditions in the region could result in a shortfall of around PKR 150 billion alone, as economic activity weakens and tax collection slows.

The revenue gap has also been widened by increased payments to exporters. More than PKR 60 billion in refunds were issued in March, adding pressure on net collections.

Data shows that the FBR collected PKR 8,121 billion in taxes during the July-February period of the current fiscal year. However, sources warned that the cumulative shortfall from July to March could exceed PKR 600 billion.

Analysts attribute the weaker performance in March to rising petroleum prices and a slowdown in economic activity, both of which have dampened revenue generation.

“Increased refund payments to exporters have also contributed to the pressure on tax revenues,” a source said.

Meanwhile, the International Monetary Fund has not yet approved a request to lower the overall tax collection target, according to FBR officials, complicating efforts to manage the widening gap.

The shortfall underscores growing fiscal challenges for Pakistan as it navigates external pressures, inflation, and commitments tied to its IMF program.