By Abdul Ghani

Pakistan’s tax collection reached Rs1.722 trillion during the first two months of FY2026-27, exceeding the combined July-August target by Rs12 billion as the government seeks to maintain fiscal discipline alongside the economic recovery.

Federal Board of Revenue (FBR) tax collections during July-August were 3.7% higher than the corresponding period last year, according to the Ministry of Planning, Development and Special Initiatives' Monthly Development Update – September 2026, available with Wealth Pakistan.

The FBR collected Rs902 billion in August alone, helping push cumulative receipts for the first two months of the fiscal year above the combined target.

The Rs1.722 trillion collected during July-August compares with Rs1.661 trillion in the corresponding period of FY2025-26, representing an increase of about Rs61 billion.

The figures show that tax collection remained above target despite the economy entering the new fiscal year with renewed inflationary pressures and a mixed fiscal backdrop.

The September update places continued fiscal discipline among the key requirements for sustaining economic recovery, alongside price stability, export promotion and structural reforms.

The tax performance comes as economic activity across several major sectors remained resilient at the beginning of FY2026-27.

Large-Scale Manufacturing expanded 3.03% year-on-year in July, with 13 of the 22 sectors covered by the index recording positive growth. Automobiles led the expansion with 57.01% growth, followed by other transport equipment at 40.2%, tobacco at 35.8% and wearing apparel at 22.03%.

Domestic cement sales also increased 8% to 7.1 million tonnes during July-August, which the ministry attributed to stronger domestic demand and increased construction activity.

External-sector activity strengthened as well. Goods exports increased 7.04% to $5.46 billion during July-August, while total exports of goods and services rose 9.2% to $7.256 billion. Workers’ remittances increased 14.7% to $7.287 billion.

At the same time, inflation has again emerged as a challenge. Average CPI inflation rose to 10.2% during July-August, compared with 3.6% in the corresponding period last year, while the August rate reached 11.1% year-on-year.

The government is simultaneously seeking tighter control over development expenditure.

The federal Public Sector Development Programme for FY2026-27 has been set at Rs1 trillion, with resources to be prioritised for fast-moving, high-impact ongoing projects amid fiscal constraints.

Project scrutiny has already resulted in Rs7.5 billion in cost savings during July-August, including Rs6.5 billion secured during August, through the identification and elimination of non-essential project components.

The government has also finalised a scorecard-based system for future PSDP project selection, designed to move development spending towards fewer, better-prepared and higher-impact projects.

Taken together, the above-target tax collection and efforts to rationalise development costs indicate a continued focus on both sides of public finances — strengthening revenue mobilisation while seeking greater efficiency in development expenditure.

With Rs1.722 trillion collected against a combined two-month target of Rs1.710 trillion, the FBR entered the third month of FY2026-27 Rs12 billion ahead of its July-August collection target.

Credit: INP-WealthPk