By Moaaz Manzoor

The Federal Board of Revenue (FBR) collected Rs10.26 trillion in net taxes during July-April FY2025-26, registering a growth of 10.3% over the corresponding period of the previous fiscal year, according to the Pakistan Economic Survey 2025-26 released by the Ministry of Finance.

The increase in tax collection reflects improved economic activity, enhanced revenue administration and the government's ongoing efforts to strengthen domestic resource mobilization as part of broader fiscal reforms.

According to the survey, FBR tax revenues reached Rs9.31 trillion during July-March FY2025-26, up 10.1% compared with the same period last year. Revenue growth played a central role in improving Pakistan's fiscal position and supporting fiscal consolidation efforts.

The survey notes that stronger tax collection helped reduce the fiscal deficit and boosted the primary balance during the fiscal year.

Pakistan's fiscal deficit narrowed to 0.7% of GDP during July-March FY2025-26 from 2.6% of GDP in the corresponding period of the previous fiscal year. At the same time, the primary surplus increased to Rs4.09 trillion, equivalent to 3.2% of GDP. Improved tax revenues were among the key factors supporting these fiscal gains.

The survey indicates that total tax revenue collected by all levels of government increased by 11.3% to Rs10.17 trillion during July-March FY2025-26. Both federal and provincial tax authorities contributed to the increase in revenue mobilization.

Provincial tax revenues recorded particularly strong growth during the period, increasing by 25.8% to Rs860.7 billion. The combined improvement in federal and provincial tax collection strengthened the country's overall fiscal position.

According to the Ministry of Finance, tax collection benefited from stronger economic activity across major sectors of the economy. Pakistan's economy grew by 3.7% during FY2025-26, supported by positive contributions from agriculture, industry and services.

Agriculture expanded by 2.89%, industry grew by 3.51% and services recorded growth of 4.09%. The broad-based economic recovery helped expand the tax base and support revenue collection.

Large-scale manufacturing emerged as a major contributor to economic activity during the fiscal year. The sector recorded growth of 6.11%, marking a strong recovery after contraction in the previous fiscal year. Increased industrial production contributed to higher revenue generation through various tax channels.

The survey highlights that revenue performance was supported by ongoing reforms aimed at improving tax administration, expanding documentation and enhancing compliance.

The government continued implementing fiscal reforms in coordination with provincial governments under the National Fiscal Pact framework. These reforms focus on improving revenue mobilization, increasing efficiency and strengthening long-term fiscal sustainability.

According to the survey, stronger tax collection helped finance development spending and social sector programmes while reducing reliance on additional borrowing.

Development expenditure increased by 26.8% to Rs1.95 trillion during July-March FY2025-26, reflecting continued government investment in infrastructure and development projects. At the same time, pro-poor expenditures reached Rs4.66 trillion, supporting education, health, social welfare and other priority sectors.

The survey notes that stronger revenue generation also supported public debt management by reducing financing pressures and contributing to fiscal consolidation.

Public debt growth remained contained at 3.4% during the first nine months of FY2025-26 compared with 6.7% during the same period of the previous fiscal year. The improved fiscal position helped strengthen debt sustainability indicators and reduce borrowing requirements.

According to the Ministry of Finance, continued efforts to broaden the tax base, improve compliance and modernize tax administration will remain critical for supporting economic development and maintaining fiscal stability.

The survey emphasizes that sustainable revenue growth is essential for financing public services, supporting development programmes and reducing fiscal vulnerabilities over the long term.

With FBR net tax collection crossing Rs10.26 trillion during July-April FY2025-26 and overall tax revenues maintaining double-digit growth, revenue mobilization remained a key pillar of Pakistan's fiscal consolidation strategy and economic stabilization efforts.

Credit: INP-WealthPk