Tax collections could go up by Rs500 billion

ISLAMABAD: The tax revenue collected by Pakistan could go up by Rs500 billion if the tax system is improved. This was said by the chairman of the Federal Board of Revenue (FBR), Sohail Ahmad, while talking to selected journalists here on Wednesday.

He explained that a massive increase in revenue is possible if the reforms are made right from the union council to the federal level.

The chairman added that the reformed General Sales Tax (Tax) would be enforced on October 1. He clarified that Pakistan had itself proposed the introduction of Value Added Tax (VAT) in July to the International Monetary Fund but later decided that the reformed GST would be implemented instead.

Commenting on the Afghan-Pak Transit Trade Agreement (APTTA), he said that the agreement has been devised according to international laws. APTTA served the interests of Pakistan as well as Afghanistan. The arrangement would benefit Pakistan by giving it access to Central Asian states adding that India’s trucks will not be allowed to go to Afghanistan via our territory.

While responding to a question he disclosed that sixteen new regional tax offices had been set up under the tax administration reforms project introduced by the FBR. The records of all RTOs have been computerised, minimising chances of data loss.

In an effort to encourage self accountability, he appealed to tax payers to file returns with honesty. He warned that the FBR had the authority to take action against defaulters.

The Federal Board of Revenue (FBR) has set a tax collection target of Rs 335.9 billion for the first quarter of the financial year 2010-11. This marks an increase of 27.4 per cent from the Rs 263.7 billion target set for the same period in the last year.

Documents available to The Express Tribune revealed that the collection target for July has been kept at Rs90.1 billion, 20.6 per cent higher than the target set for the first month of the previous fiscal year. The target for July in fiscal 2009-10 was Rs74.7 billion.

The tax collection body hopes to receive Rs121.5 billion in direct taxes and Rs214.4 billion in indirect taxes. The figure for indirect revenue is further divided into Rs140 billion for sales tax, Rs37.7 billion in custom duties and Rs36.7 for federal excise duties.

For the month of July, the FBR plans to collect Rs22.5 billion in direct taxes, Rs45 billion in sales tax, Rs11.5 billion in custom duties and Rs11.1 billion in federal excise duties.

The collection targets for the months of August and September have been set at Rs102.4 billion and Rs143.4 billion, respectively.

Published in The Express Tribune, July 22^nd, 2010.