FBR likely to miss three-month target. PHOTO: FILE
Provisional revenue collection figures suggested that the Federal Board of Revenue (FBR) may miss its first three-month target by at least Rs30 billion, said officials.
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They pointed out that the main reason for falling short of the Jul-Sept target of Rs890 billion was the adverse impact of the Rs35-billion tax relief given by the last government. A slow release of funds for the Public Sector Development Programme also impacted the tax revenues.
The new Pakistan Tehreek-e-Insaf (PTI) government has presented a mini-budget in parliament to recoup some of the losses caused by the tax relief. The National Assembly is currently debating the mini-budget.
Similarly, with only two days left in the current month, so far less than 300,000 people and entities have filed annual income tax returns. These dismal figures suggest that the government has not been able to focus on areas that require immediate attention.
“There is a high possibility that the government is going to give a one-month extension in the deadline for filing income tax returns,” an official said.
The matter has also been discussed with Finance Minister Asad Umar who has given the FBR the go-ahead for the extension.
“A reasonable time has not been given for filing tax returns and statements,” the Pakistan Tax Bar Association (PTBA) complained to FBR Chairman Jahanzeb Khan.
The association stated that without providing time for preparing and filing tax returns, it was not legal to ask people to file returns by the statutory deadline of September 30.
The association argued that various amendments and fundamental changes had been made from time to time and even after introduction of the Income Tax Return and Wealth Statement Forms 2018, which were finalised on August 17, 2018.
It also pointed out that the draft of corporate tax return had not yet been finalised.
The association called for extending the deadline for filing returns till November 16, 2018 - three months from the date of notification - in order to maximise the number of filers and facilitate existing taxpayers.
In fiscal year 2017-18, about 1.4 million people and entities had filed annual income tax returns.
After achieving the first two-month target, the FBR is facing problems in meeting the revenue target for September.
In September last year, the FBR had collected Rs321 billion. In the first 28 days of this month, it received about Rs275 billion. However, tax authorities hope that they could collect another Rs80 billion in the remaining two days.
The State Bank of Pakistan has also instructed banks to facilitate tax payments at the weekend.
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A substantial shortfall in tax revenues may weaken Pakistan’s negotiating position with the International Monetary Fund (IMF). An IMF staff-level team is currently visiting Pakistan.
Although the finance minister has announced additional tax measures of Rs183 billion to achieve the revised annual target of Rs4.398 trillion, actual tax measures are not more than Rs91 billion.
Dr Ikramul Haq, an eminent tax expert, has recently shared a plan with the finance minister for broadening the tax base and plugging loopholes to enhance revenue collection.
Haq emphasised that the FBR should ensure compulsory filing of tax returns by all taxpayers who paid substantial tax in advance through the withholding tax mechanism but did not file returns.
He argued that there were 84,000 registered companies with the Securities and Exchange Commission of Pakistan (SECP), but less than 30,000 filed their returns. All companies which had not filed returns should be issued notices and assessments should be finalised before the end of current fiscal year, he said.
In order to plug revenue leakages on the Customs side, Haq suggested that the FBR should ensure scanning of each and every incoming and outgoing container. “Once this is done, the Inland Revenue Service should recover evaded sales tax and income tax on the value of consignments.”
Haq said the Customs wing collected Rs606 billion in the last fiscal year even after the increase in regulatory duty on over 300 items. His assessment showed that even if 2% duty was levied on all items, the Customs’ revenue should be at least Rs1.2 trillion.
Published in The Express Tribune, September 29th, 2018.
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