Higher-than-expected sales tax receipts help FBR exceed quarterly collection targets

The Federal Board of Revenue (FBR) disclosed on Wednesday that it amassed Rs3.083 trillion in tax revenues for the first quarter (July-September) of the 2026-27 fiscal year, surpassing its target of Rs3.053 trillion by Rs30 billion. The primary catalyst behind this accomplishment was an unexpected surge in sales tax receipts. While the FBR exceeded its sales tax and Federal Excise Duty (FED) targets, income tax and customs duty collections fell short during the three-month period.

Overall revenue experienced modest growth of 7%, compared to Rs2.889 trillion collected in the same period last year.

Month-to-month, revenue collection reached Rs1.360 trillion in September, surpassing the projected Rs1.343 trillion target by Rs17 billion. The FBR reported an 11% increase in September's revenue collection, compared to Rs1.229 trillion collected in September 2025. For FY26, the FBR gathered over Rs13 trillion, exceeding the downwardly revised target of Rs12.983 trillion by over Rs21 billion. The government has projected a target of Rs15.264 trillion for FY27.

During July-September FY27, the FBR issued Rs203 billion in refunds and rebates to taxpayers, an increase from Rs159 billion. Income tax collection amounted to Rs1.437 trillion in 3MFY27, falling short of the Rs1.484 trillion target by Rs47 billion. However, income tax saw a 5% growth from Rs1.365 trillion collected in the same period last year.

Sales tax collection totaled Rs1.137 trillion, exceeding the Rs1.051 trillion target by Rs86 billion. Nonetheless, sales tax climbed by 11% from last year's Rs1.020 trillion. Higher inflation is bolstering domestic sales tax revenues, primarily due to a surge in petroleum product prices. As fuel costs rise, the Petroleum Development Levy (PDL) increases, and the ripple effect drives up prices for other goods, generating additional sales tax collections.

Customs duty collection stood at Rs312 billion in 3MFY27, falling short of the Rs320 billion target by Rs8 billion. Federal excise duty collection reached Rs197 billion, a 3% increase from the Rs191 billion collected last year. Higher-than-expected receipts from the petroleum development levy helped the government offset the shortfall in revenue collection.