Federal Board of Revenue waives penalties on goods importers

Will only have to pay principal amount, move aimed at boosting revenues.

ISLAMABAD: As Prime Minister Mian Nawaz Sharif is displeased over missing this year’s tax target, revenue authorities have waived penalties on tax defaulters and asked them to pay just the principal amount before the end of June in a desperate attempt to boost the country’s revenues.

The Federal Board of Revenue (FBR) has also given an extension in keeping goods at warehouses and removed default surcharge and penal surcharge on goods stored at Customs warehouses. On Monday, it issued two separate notifications to give effect to these decisions.

Compared to the original tax target of Rs2.381 trillion for the current fiscal year ending June 30, the FBR could bag just Rs1.682 trillion by the end of May, remaining almost Rs700 billion short of the target with just one month left before the close of year.

In June last year, the FBR had collected Rs270 billion, but tax authorities informally admitted that even that amount would be difficult to collect this June. Assessments show that total tax collection this year may be less than Rs1.96 trillion, which will be Rs421 billion less than the target.

Lower revenues may put an extra burden on the taxpayers as the new government will have to take additional revenue measures to meet next year’s target. According to sources, the government may set Rs2.475 trillion tax target for next year whereas the FBR insists it will not be able to collect more than Rs2.315 trillion, which is even less than this year’s target.



Giving the reason for waiving penalties, the FBR said the step would provide relief to the business community by extending the warehousing period and removing penal surcharge on over-stayed goods in Customs bonded warehouses.

The normal period for keeping goods in these warehouse is three months. The FBR charges 1% monthly penal surcharge on the defaulted amount.

To qualify for the facility, the importers will have to pay the entire principal amount before the close of fiscal year on June 30. The facility is available only for 20 days, with effect from June 10.

Furthermore, the FBR also waived default surcharge, penalty and other surcharges payable by a person against whom sales tax, federal excise duty, customs duty and income tax are outstanding on account of an audit observation, audit report, show-cause notice and adjudication or assessment order.

The defaulters will have to pay the principal amount before the close of fiscal year.

However, the incentive will not be provided in cases of fake refund and drawback claims, cases involving tax fraud and where prosecution proceedings have been initiated.

Unmet targets

Meanwhile, in the National Economic Council (NEC) meeting on Monday, the premier showed his annoyance over missing of all major economic targets in the current fiscal year, particularly by the FBR.

The prime minister has directed Finance Minister Ishaq Dar to seek an explanation from those who were tasked with achieving the targets, said Ahsan Iqbal, Minister for Planning and Development. Dar will approach the officials concerned, he said.

According to the Prime Minister’s Office, the premier told the Ministry of Finance to present a report to the cabinet listing recommendations, including structural reforms, for improving revenue collection.

Dar has blamed deep-rooted corruption in the FBR for the massive shortfall in tax revenues.

Published in The Express Tribune, June 11^th, 2013.

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