In a significant achievement for provincial tax collection, Sindh has emerged as the leading contributor in the first quarter (July–September) of the fiscal year 2025-26, with an 18% increase in sales tax collection on services compared to the same period last year. According to official data released by the Ministry of Finance, Sindh collected Rs. 68.4 billion in sales tax revenue during the first quarter, up from Rs. 58 billion in the corresponding period of FY25. This notable growth underscores Sindh’s crucial role in the nation’s overall revenue generation, reinforcing its position as a key economic hub in Pakistan.
While Sindh led in total collection, Punjab outpaced other provinces in terms of growth rate. The province saw an impressive 27% year-on-year increase in sales tax revenue, reaching Rs. 65 billion in Q1 FY26, compared to Rs. 51 billion in Q1 FY25. The growth in Punjab is attributed to the province’s continued investment in digitizing tax systems and enhancing enforcement measures, which have streamlined compliance processes and boosted efficiency.
Khyber Pakhtunkhwa (KP) also showed encouraging growth, posting a 14.4% increase in sales tax collection, amounting to Rs. 10.3 billion for the first quarter of FY26. This improvement reflects the province’s ongoing efforts to strengthen its tax administration and improve its revenue generation capabilities. Similarly, Balochistan recorded a notable 26.3% growth, with its sales tax collection rising to Rs. 5.3 billion from Rs. 4.37 billion in Q1 FY25.
Together, the four provinces of Pakistan collectively generated Rs. 149 billion in sales tax revenue during the first quarter of FY26, marking a 22% year-on-year increase compared to Rs. 122 billion collected in the same period last year. This robust performance signals a positive shift in Pakistan’s tax landscape, driven by a combination of improved compliance, digital tax initiatives, and better coordination among provincial revenue authorities.
The Ministry of Finance highlighted that the surge in tax collections is a direct result of the federal and provincial governments’ collective efforts to modernize the tax system, including the expanding use of digital platforms for tax filing and payment. By reducing manual intervention and enhancing automation, these initiatives have made it easier for businesses to comply with tax regulations while improving transparency and efficiency in tax administration.
Officials also emphasized that enhanced coordination between the provincial revenue authorities has played a vital role in harmonizing the tax collection process across the country. This collaborative approach has not only helped streamline the tax filing process but has also resulted in better enforcement of tax laws, ultimately leading to improved revenue generation for the government.
Looking forward, experts believe that continued investment in digital infrastructure and further enhancements to tax administration will be key to sustaining this growth momentum in the coming quarters. As provinces work to strengthen their tax systems, Pakistan is expected to see further improvements in compliance rates and an overall increase in tax revenue, which will be critical for the country’s economic stability and development.
In conclusion, while Sindh’s performance in Q1 FY26 has placed it at the top of the provincial sales tax rankings, the overall growth across all provinces reflects a broader trend of improved tax administration and better revenue mobilization. With digital systems and enhanced enforcement measures continuing to play a central role, Pakistan’s tax landscape is expected to evolve towards greater efficiency and transparency.
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