ISLAMABAD: Despite a decent growth rate, the Federal Board of Revenue has missed its 10-month target by Rs135 billion, indicating that it will not be able to achieve even the downward revised tax target of Rs3.935 trillion for 2017-18.
From July through April, the FBR has recorded a provisional net revenue of over Rs2.922 trillion, said the tax-collection body on Monday. The collection was Rs409 billion or 16% higher than the Rs2.513 trillion collection during July-April period of the previous fiscal year. However, the FBR had originally set Rs3.057-trillion as the collection target for July-April period.
K-P has highest growth rate in Pakistan
Parliament had approved a Rs4.013-trillion tax collection target for the outgoing fiscal year. Due to continuous shortfall, the federal government has now officially lowered the target by Rs78 billion to Rs3.935 trillion.
But the first ten months indicate that even the downward revised target is unrealistic, as the gap has already widened by Rs135 billion, which is far higher than only Rs75 billion reduction in the original target.
The FBR said the increase in tax collection was despite the fact that it gave Rs68 billion in tax refunds this year as compared to Rs53 billion worth of refunds issued during the corresponding period of the previous fiscal year, an increase of 28%.
According to some estimates, the FBR has so far withheld Rs350 billion worth of genuine refunds of taxpayers. But the FBR officially admits only Rs128 billion in sales tax refunds.
The FBR has also taken huge advances from big corporations during the course of the fiscal year, sources said. In certain cases, the FBR has taken advance income tax for the July-September quarter of fiscal year 2018-19, which has yet to begin.
The provisional collection for the month of April 2018 stood at Rs295 billion, as against Rs252 billion collected during the corresponding month of the previous fiscal year. The FBR has recorded an increase of over 17% over the revenue collected during the April, 2017. The figures of collection received in the treasuries of the remote areas may further increase revenue figures.
PML-N targets 6.7% growth rate in 12th Five Year Plan
The revenue collection trend during the first ten months of the financial year augurs well for the efforts of FBR towards achievement of the assigned revised annual revenue targets, according to the FBR.
Over the period, the FBR’s reliance on indirect taxes, particularly on custom duties, is on the rise. Despite the downward revision of the total annual target, the FBR has instead further increased the custom duties collection target to Rs600 billion. The upward revised custom duties target will be equal to 15.2% of the new annual target of this fiscal year. This at one time used to be less than 10%. For the next fiscal year 2018-19, the government has set the custom duties collection target at Rs735 billion, which will be equal to 16.5% of the next year’s target of Rs4.435 trillion.
Less than 6,000 workforce of the Customs collect more than 52% of the total FBR’s revenues that include withholding taxes and sales tax at import stage and the custom duties. Over 16,000 Inland Revenue people collect only 48% of the total revenue, indicating a serious structural flaw.
The FBR has cut the income tax collection target from roughly Rs1.6 trillion to Rs1.563 trillion. The new income tax collection target is only 39.7% of the annual target. For the next fiscal year 2018-19, the government has set the income tax collection target at Rs1.735 trillion or 39.2% of the total target.
The sales tax collection target has also been downward revised to Rs1.547 trillion for the outgoing fiscal year. For the next fiscal year 2018-19, the sales tax collection target is Rs1.7 trillion, which is 38.3% of the target.
Published in The Express Tribune, May 1st, 2018.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ