FBR Under Pressure as Tax Return Filings Fall to Less Than Half of Last Year

The Federal Board of Revenue (FBR) is under growing scrutiny as it faces significant hurdles in meeting tax collection goals, with income tax return filings showing a steep decline compared to last year and technical breakdowns further compounding the crisis.

Tax Return Numbers Plunge

By the deadline of September 30, only 3.2 million tax returns had been submitted nationwide. This figure is less than half of the 7.7 million returns filed in the previous tax year, signaling a worrying shortfall at a time when the FBR is racing to secure its first-quarter revenue target of Rs. 3.083 trillion.

Technical Failures Worsen the Situation

The already sluggish filing pace was further disrupted when the FBR’s IRIS portal—the digital system used across Pakistan for filing returns—remained inaccessible for most of Monday. The downtime left taxpayers and consultants locked out, unable to submit returns for Tax Year 2025.

This triggered urgent appeals from professional bodies. The Lahore Tax Bar Association (LTBA), in a formal letter to the Finance Minister, warned that widespread non-compliance could occur “through no fault of taxpayers.” The association emphasized that tax practitioners were powerless to file returns during the outage and called for an immediate extension of the filing deadline.

Broader Administrative Struggles

Amid this chaos, the FBR has also been forced to extend deadlines in other areas, including:

• Tax-free sugar imports, and

• Implementation of real-time electronic sales tax reporting for traders.

These delays reflect ongoing challenges in tax administration and enforcement, raising concerns about whether the FBR can keep pace with both domestic expectations and international commitments.

IMF Monitoring FBR’s Reforms

Adding to the pressure, the International Monetary Fund (IMF) has been closely monitoring Pakistan’s revenue reforms. The IMF has urged the FBR to demonstrate tangible progress on its tax transformation plan, which was approved last year by Prime Minister Shehbaz Sharif with a budget of over Rs. 55 billion.

The plan focuses on digitizing and modernizing tax systems to expand the tax net and improve compliance. However, the ongoing operational and technical breakdowns suggest that the road to reform remains difficult, and the FBR’s credibility is increasingly at stake.