Sources said the federal budget for FY2026-27 was likely to be around Rs18 trillion. Most of the financial issues have been discussed and settled but the virtual negotiations between the Federal Board of Revenue (FBR) and the International Monetary Fund (IMF) are apparently ongoing on ideas to provide relief to the salaried class.

The IMF has agreed to cut the FBR’s tax collection target for the current fiscal year for the second time, sources said.

The revised objective has been decreased to Rs13.005 trillion from Rs13.979 trillion, according to reports. The government is likely to fix a total tax collection target of around Rs15.264 trillion for the next financial year.

The proposed revenue break-up is Rs7.413 trillion from direct taxes, Rs4.727 trillion from sales tax, Rs1.651 trillion from customs duties and Rs1.043 trillion through Federal Excise Duty.

IMF asks Pakistan to broaden tax net, boost revenue collection
Meanwhile, the Petroleum Development Levy (PDL) is projected to continue to be a major source of government revenue. Sources said the target for PDL collections could be boosted to Rs1.727 trillion in the next fiscal year as against Rs1.468 trillion for this year.

Non-tax revenue is likely to be around Rs2,768 billion while petrol surcharge receipts are estimated at roughly Rs151 billion.

On the spending side, debt servicing will probably remain the major budgetary burden on the federal government. Total interest and debt servicing payments are anticipated to be Rs7.824 trillion. Of that, Rs6.652 trillion is for domestic debt and Rs1.107 trillion for foreign debt servicing.

Sources also say the forthcoming budget may propose new taxing measures of around Rs220 billion to help achieve budgetary targets set with the IMF.

Besides, changes in income tax brackets for salaried people are also allegedly on the cards. The government is looking at ways to provide some assistance to taxpayers in the formal sector.

The federal budget will be delivered in the next several days, providing further insight into taxation, spending objectives and economic strategy for the new financial year.

The Federal Board of Revenue (FBR) has registered a revenue shortfall of Rs868 billion in the first 11 months of the fiscal year 2025-26.

The tax office collected Rs11.227 trillion for July to May against a revised target of Rs12.095 trillion leaving a huge gap.

The expanding difference is attributed to two key issues, according to the reports: slower economic activity due to the ongoing Gulf conflict and the impact of the longer Eid festivities. Revenue shortfall reached Rs 184 billion in only May alone.

The FBR has collected Rs966 billion in May on a provisional basis against the monthly target of Rs1.15 trillion. Officials are still hopeful that once changes are made, the final tally for the month could be a little better.

To fulfil the revised yearly income target of Rs13.979 trillion by June 30, the FBR will have to collect almost Rs2.752 trillion in June – a daunting undertaking considering the current trend.

The tax collection target was originally set at Rs14.13 trillion by the Parliament but was then cut down to Rs13.979 trillion after an agreement with the International Monetary Fund (IMF).

As the fiscal year comes to a finish, the FBR appears to be on track for a total shortfall around Rs1 trillion. Crossing the Rs13 trillion collection mark would be a significant achievement in the current economic scenario, officials feel.

The federal government announced a major cut in fuel and diesel prices, bringing respite to the public on the third day of Eid.

Prime Minister Shehbaz Sharif had assured the public that relief would be delivered as soon as fiscal room was available and the government has now met his commitment, a statement published by the Prime Minister’s Office stated.

It said petrol prices have been decreased by Rs 22 per litre and diesel prices has been reduced by Rs 22 per litre.

Petrol Rs381.78, diesel Rs380.78/litre after Rs22 cut

“Relief to the public is my top priority,” said Prime Minister Shehbaz Sharif, adding that the government had announced similar cutbacks last week.

Even under the terrible economic situations, the government continued to give relief for the consumers with subsidies for public transport, goods transport, motorcyclists and rickshaw users, the statement further said.

It said Pakistan had secured availability of fuel in times of lineups in other nations and credited the maintenance of supply to the prompt decisions taken by the administration.

When the global oil crisis started, the government had provided subsidies of more than Rs130/litre to prevent steep hikes in domestic costs of gasoline, despite growing international rates, it said, adding that the benefit was transferred directly to the people.