KARACHI: With only one month left in the fiscal year, Pakistan’s tax collection system has released a new report that gives reason for both hope and serious concern. For the first 11 months from July 2025 to May 2026, total collections reached PKR 3.576 trillion, a solid 17% increase compared to PKR 3.069 trillion collected during the same period last year.
Customs Duty led the charge, rising 10% to PKR 961.4 billion, while Sales Tax jumped 18% to PKR 2.06 trillion. Income Tax also climbed 18% to PKR 364.3 billion, and Federal Excise Duty, or FED, skyrocketed 43% to PKR 190.4 billion, driven largely by an 800% surge in the SAPT region. However, the government has already missed its cumulative Customs Duty target of PKR 1.018 trillion by 6%, leaving a shortfall of over PKR 57 billion even before the June finish line.
But the daily collection report for May 2026 alone tells a very different and alarming story. Compared to May 2025, collections on the last day of May and for the full month crashed by as much as 99% in certain categories. For Customs Duty, the total collection for May 2026 stood at just PKR 78.65 million, down 14% from PKR 91.6 million in May 2025, and the monthly target of PKR 107.57 million was missed by a whopping 73%.
Sales Tax collection for May 2026 fell 4% to PKR 175.3 million, but the real shock came in daily numbers as on May 31, 2026, collections across all formations virtually vanished, down 93% compared to the same day last year.
Income Tax saw a steep decline as well, with monthly collection dropping 4% to PKR 30 million, while daily collection on May 31 crashed 94% from PKR 24,419 to just PKR 244. Federal Excise Duty entered a freefall, as on May 31, 2026, FED collection stood at PKR zero across most formations compared to PKR 31 on the same day last year, a 100% wipeout.
The regional breakdown shows Appraisement East as the hardest hit, where Customs Duty for May 2026 fell 99% on a daily basis and Sales Tax collapsed between 85 and 99%. Appraisement SAPT, despite being a star performer in cumulative FED with an 800% increase, saw its daily collection on May 31, 2026, for FED drop to zero.
Appraisement PQ recorded a 100% fall in Income Tax daily collection, from PKR 62 last year to zero this year.
Officials point to two possible explanations for this dramatic downturn: timing and reporting lags, as May 31, 2026, may have fallen on a weekend or holiday cycle that shifted collections into June, or a real economic slowdown, as the near-zero daily collections raise serious concerns about liquidity and trade activity.
With only June left in the fiscal year, the government now faces an uphill battle to recover the lost momentum and meet annual targets. For now, the 11-month numbers offer comfort, but May’s daily report is a flashing red warning light.
Officials have identified several additional reasons for the revenue shortfall. The import of cars has stopped, which accounts for a loss of approximately PKR 25 billion. The war with Iran is also a factor, but it has mainly affected imports from Dubai, and more importantly, it has hurt Pakistan’s edible exports to the Middle East.
However, officials say the prime culprit is the suspicious Faceless Customs Assessment (FCA) system. A special order called SRO 1637 was issued in November 2024, and the FCA system was implemented in December 2024 without any pilot test run.
Under this system, officials allege that from December 2024 to May 2025, a senior officer forced appraising staff to treat non-green consignments as green, meaning no examination was done, no documents were called for, and the consignments were simply cleared without due process.
Normally, 70% of consignments were already being cleared through the fast-track green channel, but the remaining 30% were also cleared in the same manner without any checks.
Two criminal cases (FIRs) were lodged by Appraisement East against revenue evasion of PKR 5.4 billion, and one appraiser had sent a consignment of acetate for testing.
But instead of being rewarded, that appraiser was reprimanded by a deputy collector, while other officers who did no examination and called no documents were given rewards worth millions of rupees.
The Chairman of the Federal Board of Revenue, or FBR, has reportedly blocked any audit or scrutiny of imports made under the FCA system in the first four months of its launch.
Officials warn that an audit of these imports may uncover massive scams and revenue loss, and it needs to be investigated who the importers are who are using the green channel without any examination of their consignments.
It may be mentioned here that if an audit is not conducted within five years, it will not be conducted at all.
Other problems in the system include fraudulent auctions, where one collector allegedly auctioned consignments that could not legally be auctioned, and the winning bidders never received the goods and had to approach the Federal Tax Ombudsman to get their money back.
The infamous solar panel import scam reportedly happened during that same collector’s tenure.
Officials say that collectors in Appraisement South are absolutely powerless with no authority, and this was done by the Chairman FBR.
Collectors cannot do proper valuation because of staff shortages, and they do not have staff for intelligence and research. A senior officer was given the job of creating an intelligence team for the new FCA system, but the team was never formed.
Moreover, the Chairman FBR never appointed a seasoned appraisement officer as a Member of Customs; instead, irrelevant and non-technical officers were given those positions.
Earlier, Customs Intelligence was deactivated and replaced with a Facilitation Mechanism department, but that department was not given enough staff to do its job.
On the positive side, officials admit that the FCA system has successfully stopped the blackmailing and extortion that used to happen by appraisers and examiners. However, an official said that most officers suspected of corruption have their families settled abroad, and they also move abroad after retirement, so it is important to investigate the assets of these officers outside Pakistan.
With only one month left in the fiscal year, the government now faces an uphill battle to recover lost momentum and meet its annual targets. For now, the 11-month numbers offer comfort, but May’s daily report is a flashing red warning light.