The FBR revenue target always features as a key indicative target in the review process of IMF Programmes. The level of FBR revenues is also a key determinant of the state of public finances. These revenues are a big source of revenue to both federal and provincial governments.

The year, 2024-25, witnessed revenues of close to Rs 11,700 billion of the FBR. These revenues represent a dominant share of 84 percent in national tax revenues, which also include the revenues from provincial taxes and the petroleum levy.

FBR revenues are shared with the provincial governments under the 7th NFC Award. These governments are entitled to a share of 57.5 percent from the divisible pool of revenues, consisting of FBR revenues. Consequently, through the transfers, FBR revenues represent almost 87 percent of the total tax revenues of the four provincial governments combined. Net of transfers, FBR revenues contribute almost 54 percent to total federal revenues.

The year, 2024-25, has witnessed both positive and negative outcomes with respect to FBR revenues. Attainment of the level of revenues at Rs 11,700 billion represented a very high growth rate of 25.7 percent, with an absolute increase of as much as Rs 2,389 billion. Consequently, the FBR revenues to GDP ratio rose sharply from 8.9 percent to 10.2 percent of the GDP in 2024-25.

However, there was simultaneously a big shortfall of Rs 1270 billion with respect to the budgetary target of Rs 12,970 billion, implying a big shortfall of almost 10 percent. This shortfall is attributable to an extraordinarily ambitious target growth rate in FBR revenues of 40 percent, in an economy with low growth rate of 3........

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