FBR beats tax target by Rs298b
TRIBUNE: CREATIVE
The Federal Board of Revenue (FBR) has exceeded the five-month tax collection target by Rs298 billion and received around Rs2.3 trillion, largely because of higher collection at import stage, which contributed more than half of total tax receipts.
The FBR remains the main beneficiary of increased imports and the nosediving rupee that significantly contributed to the collection of indirect taxes.
Official statistics showed that where sales tax at the import stage increased 80%, the domestic sales tax collection was negative during the July-November period of current fiscal year.
According to provisional data, the FBR collected net revenue of Rs2.314 trillion during July-November of current fiscal year (2021-22), according to a statement issued by the revenue board.
It showed a growth of 36.5% over collection of Rs1.695 trillion during the same period of previous year.
In the first five months of previous fiscal year, the FBR had received Rs1.7 trillion in taxes and now it has recorded an increase of Rs619 billion at a growth rate of around 37%.
The FBR has exceeded the target by Rs298 billion. However, out of the excess collection, the contribution of income tax was Rs56 billion and the rest came from sales tax at the import stage and customs duty, showed the provisional figures.
The International Monetary Fund (IMF) remains sceptical about the consistency in FBR’s performance over the long term due to the possibility of slowdown in imports.
Finance Adviser Shaukat Tarin has already said that the FBR’s new target will be Rs6.1 trillion but the five-month collection is based on the original target of Rs5.829 trillion.
Two weeks ago, the finance adviser said that the government would unveil a mini-budget as part of IMF’s prior actions and withdraw sales tax exemptions of around Rs350 billion that the fund said should be taken back with immediate effect.
Overall, the FBR collected 67% or Rs1.55 trillion in indirect taxes – general sales tax, customs duty and federal excise duty, which were three main sources of indirect taxes. Similarly, Rs1.24 trillion or 53.6% of total collection was at the import stage.
The reliance on indirect taxes has increased inflationary pressure at a time when the country is witnessing rupee depreciation.
Tax-wise breakdown
The FBR collected Rs761 billion in income tax in the first five months of current fiscal year, up Rs179 billion or 31% over the same period of previous year. Over Rs114 billion worth of income tax was collected at the import stage.
The income tax collection was higher by Rs56 billion than the target set for the first five months of FY22.
The share of income tax in total revenues stood at 33%, which placed increased burden on people who had lower payment capacity. The Pakistan Tehreek-e-Insaf (PTI) election manifesto had promised to increase the share of direct taxes to 45% from 38%.
The FBR recorded 41% growth in sales tax collection in the July-November period due to heavy reliance on import taxes. It collected Rs1.05 trillion in sales tax in five months, up Rs302 billion.
However, the entire increase came at the import stage as the domestic sales tax collection turned negative.
The FBR collected Rs314 billion in domestic general sales tax (GST) compared with Rs337 billion last year.
Contrary to that, GST collection at the import stage stood at Rs733 billion in the first five months of current fiscal year against Rs407 billion last year. There was an increase of Rs326 billion or 80% in GST collection at the import stage.
Federal excise duty collection amounted to Rs122 billion in the five-month period, which was Rs1 billion less than the corresponding period of previous year.
Customs duty collection increased to Rs383 billion, higher by Rs119 billion or 45%. It was Rs58 billion more than the target.
The FBR statement said that while chasing the target of Rs408 billion for November 2021, the net collection was Rs470 billion, higher by Rs62 billion or 35.2% compared to the assigned target.
The FBR said that spectacular performance in the first five months of FY22 clearly showed that it was well on its way to achieving the target of Rs5.829 trillion for the year despite daunting challenges, compelling constraints posed by the Covid pandemic, and sporadic tax cuts announced by the government as relief and price stabilisation measures.
Published in The Express Tribune, December 1st, 2021.
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