Nine months of FY14: FBR pockets Rs1.57t, falls short of parliament’s target
Collection remains in line with IMF’s projection.
Rs597b was collected by the tax authorities as income tax. PHOTO: FILE
ISLAMABAD:
Amid politically-motivated concessions extended by the government so far, tax authorities have collected Rs1.57 trillion in the first nine months of the fiscal year, falling short of the parliament’s approved target but remaining in line with the International Monetary Fund’s projections.
Pulled by indirect taxes, the Federal Board of Revenue (FBR) collected Rs1.573 trillion in taxes from July through March of the current fiscal year, higher by Rs219 billion or 16% over the collection made in the comparative period the previous year, said Shahid Hussain Asad, Member Inland Revenues of the FBR.
However, the collection was Rs210 billion short of the target, which had been worked out on the basis of Rs2.475 trillion target, approved by the parliament in June last year. The IMF has revised the annual target downwards to Rs2.345 trillion. The international lender had accurately assessed that the FBR would raise Rs1.567 trillion in nine months.
Since assuming power in June last year, the federal government has accepted 26 demands of the business community, as admitted by Finance Minister Ishaq Dar in presence of Prime Minister Nawaz Sharif. These concessions, mainly relaxing documentation clauses, have worked against the principles of taxation, according to the sources.
For instance, in case of the beverages industry, in order to give benefit to PML-N’s three financiers, the federal government forced the FBR to change the regime, which in the first eight months caused over a billion rupee loss to the exchequer. Instead of posting any growth, the collection from beverages fell Rs500 million short of last year’s collection, according to the FBR.
The inefficiency and rampant corruption in the FBR were the other main reasons for the massive shortfall in tax targets. Due to less than the targeted collection, the federal government has already cut the development budget by Rs115 billion.
The FBR also embarrassed Finance Minister Ishaq Dar, as it could not publish the tax directory of all the taxpayers till March 30. Tax directory deadline has been extended for two weeks, as it is a cumbersome exercise to publish accurate data of 890,000 taxpayers, said Asad.
During the first nine months, the FBR collected Rs742 billion in sales tax, higher by Rs119 billion or 19% over the previous year. The IMF had assessed that the FBR would raise Rs708 billion in sales tax. The FBR surpassed IMF’s projections as it has blocked over Rs90 billion genuine refunds of the taxpayers, according to the sources.
The tax authorities collected Rs597 billion as income tax, up by Rs52 billion or almost one-tenth of last year’s collection, said Asad. The IMF had estimated Rs591 billion income tax collection.
However, on account of customs duties, the FBR’s collection fell even behind the IMF’s conservative assessments. The FBR collected Rs170 billion in custom duties, Rs8 billion or 5% less than the last year’s collection. The IMF has estimated Rs178 billion customs duties.
The federal excise duties collection stood at Rs109 billion as against Rs83 billion in last year, showing 31% growth, said Asad.
In a related development, the FBR on Monday introduced changes in mode of sales tax collection from CNG sector. The President has already promulgated an Ordinance to this effect.
The FBR said that sales tax’s standard rate will remain 17% but will be charged and collected from CNG stations through their gas bills. The FBR maintained that only the mode had been changed and no new tax has been imposed.
Published in The Express Tribune, April 1st, 2014.
Amid politically-motivated concessions extended by the government so far, tax authorities have collected Rs1.57 trillion in the first nine months of the fiscal year, falling short of the parliament’s approved target but remaining in line with the International Monetary Fund’s projections.
Pulled by indirect taxes, the Federal Board of Revenue (FBR) collected Rs1.573 trillion in taxes from July through March of the current fiscal year, higher by Rs219 billion or 16% over the collection made in the comparative period the previous year, said Shahid Hussain Asad, Member Inland Revenues of the FBR.
However, the collection was Rs210 billion short of the target, which had been worked out on the basis of Rs2.475 trillion target, approved by the parliament in June last year. The IMF has revised the annual target downwards to Rs2.345 trillion. The international lender had accurately assessed that the FBR would raise Rs1.567 trillion in nine months.
Since assuming power in June last year, the federal government has accepted 26 demands of the business community, as admitted by Finance Minister Ishaq Dar in presence of Prime Minister Nawaz Sharif. These concessions, mainly relaxing documentation clauses, have worked against the principles of taxation, according to the sources.
For instance, in case of the beverages industry, in order to give benefit to PML-N’s three financiers, the federal government forced the FBR to change the regime, which in the first eight months caused over a billion rupee loss to the exchequer. Instead of posting any growth, the collection from beverages fell Rs500 million short of last year’s collection, according to the FBR.
The inefficiency and rampant corruption in the FBR were the other main reasons for the massive shortfall in tax targets. Due to less than the targeted collection, the federal government has already cut the development budget by Rs115 billion.
The FBR also embarrassed Finance Minister Ishaq Dar, as it could not publish the tax directory of all the taxpayers till March 30. Tax directory deadline has been extended for two weeks, as it is a cumbersome exercise to publish accurate data of 890,000 taxpayers, said Asad.
During the first nine months, the FBR collected Rs742 billion in sales tax, higher by Rs119 billion or 19% over the previous year. The IMF had assessed that the FBR would raise Rs708 billion in sales tax. The FBR surpassed IMF’s projections as it has blocked over Rs90 billion genuine refunds of the taxpayers, according to the sources.
The tax authorities collected Rs597 billion as income tax, up by Rs52 billion or almost one-tenth of last year’s collection, said Asad. The IMF had estimated Rs591 billion income tax collection.
However, on account of customs duties, the FBR’s collection fell even behind the IMF’s conservative assessments. The FBR collected Rs170 billion in custom duties, Rs8 billion or 5% less than the last year’s collection. The IMF has estimated Rs178 billion customs duties.
The federal excise duties collection stood at Rs109 billion as against Rs83 billion in last year, showing 31% growth, said Asad.
In a related development, the FBR on Monday introduced changes in mode of sales tax collection from CNG sector. The President has already promulgated an Ordinance to this effect.
The FBR said that sales tax’s standard rate will remain 17% but will be charged and collected from CNG stations through their gas bills. The FBR maintained that only the mode had been changed and no new tax has been imposed.
Published in The Express Tribune, April 1st, 2014.