ISLAMABAD: The month of April saw a sharp fall in revenue collection from last year, plunging by 16.4 per cent to Rs242.46 billion, with all four major heads showing declines.
This is the first full month of lockdown and the data reflects sharp deceleration in economic activity. The collections were better than expected though, since they exceeded the revised target of Rs200bn, said FBR Spokesperson and Member Policy Dr Hamid Ateeq Sarwar.
A fall in revenue collection is rare. Even in the worst of times, revenue collection usually rises by at least as much as the inflation rate. Up to now revenues were showing an increase of around 16pc every month. A decline of 16pc in April shows a sharp contraction underway in the economy.
Tax-wise break up for the month of April showed that customs collections fell by Rs21.1pc or Rs10.48bn to Rs40.62bn compared to Rs51.478bn in the last year. The decline was mainly attributable to falling imports, misdeclaration of goods, corruption and under-invoicing. The income tax collection clocked in at Rs79.65bn versus Rs90.63bn over the same period last year, showing a fall of Rs10.97bn or 12.1pc.
In addition, during the month under review, sales tax collection on goods also declined to Rs101.115bn as compared to Rs126.63bn last year, falling by 20.2pc or Rs25.51bn. The federal excise duty collection reached Rs20.170bn against Rs21.16bn over the last year, showing a decrease of around Rs1bn or 4.7pc.
Cumulatively, during the first 10 months of the current fiscal year, the FBR collected Rs3.307 trillion as against Rs2.982tr over the corresponding months last year, showing an increase of 10.9pc.
The International Monetary Fund (IMF) had recently revised the revenue collection target for the third time to Rs3.908tr from Rs4.8tr, a reduction of Rs892bn owing to the sharp economic slowdown due to the coronavirus.
Earlier, the IMF had reduced the collection target to Rs5.270tr from the budgetary projection of Rs5.503tr. It was further reduced to Rs4.8tr in the pre-coronavirus period to adjust the shortfall posted in the revenue collection during the first eight months of the current fiscal year.
The coronavirus-led slowdown and suspension of business activities have sharply reduced revenue collection and the FBR estimates the annual revenues will take a hit of Rs850bn.
Dr Hamid said the FBR will have to collect Rs250bn in May and Rs398bn in June to achieve the revised target of Rs3.908tr by June. He said revenue collection will improve if economic activity resumes in the next couple of months.
The data for April showed that the FBR failed to achieve all of its respective projected targets for the first 10 months of the current fiscal year.
Moreover, the FBR released Rs116.961bn in refunds/rebate during the first 10 months as against Rs65.150bn in the corresponding period last year, an increase of 79.5pc.
Published in Dawn, May 1st, 2020