ISLAMABAD: Pakistan’s Federal Board of Revenue (FBR) on Saturday reported a strong pickup in tax collection in January, driven by a sharp rise in direct taxes, as the government seeks to shore up public finances under a reform-led revenue mobilization drive.

The tax authority collected a provisional Rs1.02 trillion ($3.65 billion) in January, up 16% from Rs.873 billion ($3.14 billion) in the same month last year, surpassing the six-month average growth rate of 10-11%, according to an official statement.

“This month’s tax performance reveals a nuanced and strategically significant fiscal outcome, characterized by substantial increase in direct taxation, modest growth in indirect and excise streams and an overall healthy and improved performance in January 2026,” the statement said.

“It also reinforces the credibility of reform-driven revenue mobilization and transformation plan of FBR,” it added.

Income tax collection rose 26% to Rs483 billion ($1.74 billion) from Rs381 billion ($1.37 billion) a year earlier, reflecting what the FBR described as the impact of enforcement measures and efforts to unlock revenue tied up in litigation.

Sales tax receipts increased 12% to Rs360 billion ($1.30 billion) from Rs322 billion ($1.16 billion) last year, which the tax authority linked to signs of recovery in large-scale manufacturing.

The FBR said the results underscored the effectiveness of its reform program, including the use of digital infrastructure and enforcement tools to improve compliance and expand the tax base, while encouraging voluntary taxpayer participation.

Cumulatively, the FBR collected Rs7.18 trillion ($25.83 billion) in the first seven months of the 2026 fiscal year, compared with Rs6.49 trillion ($23.36 billion) in the same period last year.

The tax authority said it was optimistic that continued recovery in manufacturing would help it meet its full-year revenue targets, adding that it aimed to maintain momentum in the remaining months of the fiscal year.