Sindh may again miss revenue target amid pandemic curbs

Published March 14, 2021
For the second year in a row, the Sindh Revenue Board (SRB) is likely to miss its collection target set for the current fiscal year. — Reuters/File
For the second year in a row, the Sindh Revenue Board (SRB) is likely to miss its collection target set for the current fiscal year. — Reuters/File

KARACHI: For the second year in a row, the Sindh Revenue Board (SRB) is likely to miss its collection target set for the current fiscal year in the wake of the National Command Operation Centre decision to re-impose a number of coronavirus restrictions due to the fear of the third wave of Covid-19 in the country, it emerged on Saturday.

The SRB collects sales tax on services under the Sindh Sales Tax on Services Act. However, it’s the services sector that hit has been hard by the first and second waves of Covid-19 in the previous and current financial years.

Established in 2011, the first year recovery of the SRB in the head of sales tax on services was Rs25bn. It has been on the rise ever since as official data showed that the SRB collected Rs33.7bn in 2012-13; Rs42.49 in 2013-14; Rs49.37bn in 2014-15; Rs61.6bn in 2015-16; Rs78.5bn in 2016-17; Rs100.3bn in 2017-18; Rs100.1bn in 2018-19 and Rs105.9bn in 2019-20.

It has achieved an annual growth rate of 25 per cent from its inception in 2011 until 2018-19 amid a countrywide economic slowdown due to a historic current account deficit and unprecedented pressure on exchange and discount rates as well as suspension of levy of sales tax on cellular phones due to the apex court’s order.

The annual budgetary target for 2019-20 was set at Rs145bn for the SRB, but it was revised and set at Rs135bn — that too could not be achieved due to Covid-19 which had badly hampered the revenue collection in the last four months of FY20. But despite this, SRB’s collection increased by 5.6pc compared to what it was in 2018-19.

For 2020-21, Sindh Chief Minister Murad Ali Shah had set the budgetary target at Rs135bn, but the SRB’s eight-month collection, from July till February, stands at Rs77.1bn — 12.5pc higher than the sales tax collection during the same period last year.

The half-year collection of the same financial year was Rs57.02bn as compared to the collection of Rs49.2bn during the same period of the FY20 — a 16pc growth.

If it continues to collect sales tax at the same pace witnessed during 8MFY21 — average Rs9.63bn per month — then it would collect Rs38.55bn more during the remaining four months. Thus the total 12-month collection would stand at Rs115.65bn — a shortfall of Rs19.35bn in the targeted collection.

Major sectors from where the SRB revenue came prior to Covid-19 were port, airport and terminal operators; franchise; insurance; banks; contract execution; telecommunication; construction; technical, scientific and engineering consultants; labour and manpower services and restaurant and cafes.

The standard statutory rate of the Sindh Sales Tax on Services stands at 14pc, with a few exceptions, whereas the telecom sector is taxed at the rate of 19.5pc.

“The Sindh Revenue Board is focused to achieve the assigned revenue target of Rs135bn for 2020-21 despite all the adverse factors such as low economic growth and the resurge of Covid-19,” claims an SRB official.

Published in Dawn, March 14th, 2021

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