Revenue collection posts meagre 3pc growth

Updated May 01, 2019

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The Federal Board of Revenue (FBR) collections during the first 10 months of the fiscal year showed marginal growth of three per cent posting a shortfall of more than Rs356 billion during July-April period. — Reuters/File
The Federal Board of Revenue (FBR) collections during the first 10 months of the fiscal year showed marginal growth of three per cent posting a shortfall of more than Rs356 billion during July-April period. — Reuters/File

ISLAMABAD: The Federal Board of Revenue (FBR) collections during the first 10 months of the fiscal year showed marginal growth of three per cent posting a shortfall of more than Rs356 billion during July-April period.

The total revenue collection was recorded at Rs2.981 trillion during the first 10 months of this fiscal year as against Rs2.922tr collected over the same period last year, showing a growth of 3.09pc. The target for July-April period was projected at Rs3.337tr.

The provisional figures revealed that paltry increase in collections is primarily driven by marginal growth in customs duty receipts at import stage, followed by meagre growth in collection of sales tax and withholding tax at import stage.

On monthly basis, the collections reached to Rs291bn in April 30 as against the target of Rs339bn projected for the same month, showing a shortfall of Rs48bn. The revenue collection during the month even fell short by Rs4bn compared to Rs295bn during the same month.

The lower-than-expected ­in­­crease in collections shows poor administration on the part of tax authorities and poses a challenge for the government to overcome major loopholes in the tax system. All heads — customs, income tax, sales tax and federal excise duty (FED) missed the revenue collection target.

The FBR has also withheld more than Rs200bn sales tax refunds.

The poor collection has also exposed FBR to massive reforms and revenue measures to be taken as part of the International Monetary Fund (IMF) bailout package from the next fiscal year. The government is likely to impose revenue measures of Rs600bn worth in the budget 2019-20.

The government’s steps to deal with the external sector deficits may have begun to bear fruit, but it has yet to overcome the growing shortfall in revenue collection. The focus of the current technical level talks with IMF officials is to generate maximum revenue to overcome the yawning budget deficit.

The customs collection has reached to Rs561.11bn during the July-April period 2018-19 as against the target of Rs570.3bn projected for the same months, reflecting a shortfall of Rs9.19bn. The customs collection fell behind the target of Rs61bn in April by realising revenue of Rs50bn, showing a shortfall of Rs10bn.

The customs collection fell mainly because of ban on import of furnace oil, change in the mode of import of used vehicles and compression of non-essential luxury items during the month under review.

The income tax collection during the July-April has reached to Rs1.074tr, which is much behind the projected target. FBR officials were reluctant to share the actual target projected for the income tax collection during the period under review.

Similarly, the targets for the period under review for the taxes like sales tax and FED was also kept confidential. The actual collection of sales tax between July-April stood at Rs1.165tr while the collection of FED has reached to Rs183.881bn.

A senior tax official said that collections in all the four federal taxes — income tax, sales tax, FED and customs remained behind the target during the period under review.

The annual shortfall in revenue collection is expected to be around Rs450bn by end June.

Published in Dawn, May 1st, 2019