Stronger LSM and trade activity: FBR expects surge in FY27 ST collection
The FBR forecasts significant tax revenue growth for 2026-27, driven by improvements in manufacturing, demand, and trade, with sales tax, direct taxes, customs, and FED all projected to increase.
- Projected sales tax revenue and growth for 2026-27.
- Forecasted direct tax collection and economic activity links.
- Customs duties and Federal Excise Duty projections.
ISLAMABAD: The Federal Board of Revenue (FBR) has said that the improvements in Large-Scale Manufacturing (LSM) activities, aggregate demand, and trade activity in Pakistan would result in extraordinary increase in sales tax collection during 2026-27.
According to the revenue forecasting report (2026-27) issued by the FBR, sales tax revenue is forecasted at Rs4,735 billion for 2026-27, representing a growth rate of 9.3 percent.
Given the tax’s strong association with consumption patterns, industrial output, and import volumes, this projection is anchored in anticipated improvements in LSM, aggregate demand, and trade activity. The relatively broad base of the sales tax makes it a stable yet economically sensitive source of revenue.
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Direct Taxes are projected to reach Rs7,366 billion, implying a required growth rate of 14.5 percent over the preceding fiscal year. This comparatively higher growth reflects the strong buoyancy historically observed in income-based taxation and its close linkage with projected expansion in GDP, corporate profitability, and documented economic activity.
The projection suggests continued strengthening of the direct tax base, supported by improved compliance and enforcement mechanisms.
Direct Taxes are projected to reach Rs7,366 billion, implying a required growth rate of 14.5 percent over the preceding fiscal year.
This comparatively higher growth reflects the strong buoyancy historically observed in income-based taxation and its close linkage with projected expansion in GDP, corporate profitability, and documented economic activity.
The projection suggests continued strengthening of the direct tax base, supported by improved compliance and enforcement mechanisms.
Revenue from Customs Duties is projected at Rs1,496 billion. This estimate reflects expected trends in import growth and exchange rate dynamics, as well as the tariff structure currently in place.
Given the external sector’s vulnerability to global market conditions and balance-of-payments constraints, customs revenue projections are inherently sensitive to trade policy and macroeconomic stability.
Similarly, collections under Federal Excise Duty (FED) are estimated at Rs902 billion for FY2026–27. As FED is typically levied on specific goods and services with relatively concentrated tax bases, its growth trajectory is influenced by sector-specific production trends and policy continuity, the report added.
Copyright Business Recorder, 2026
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