ISLAMABAD: After exceeding projections for several months, the Federal Board of Revenue (FBR) missed its collection target for October by 17 per cent, or Rs88 billion, owing to a sharp drop in imports, showed provisional data on Monday.

The provisional revenue collection stood at Rs512bn in October as against the target of Rs600bn. This reversal of the collection trend forced Finance Minister Ishaq Dar not to mention revenue numbers in his press conference. Also, the FBR didn’t issue any official press release.

However, October’s collection posted a 15pc growth when compared with last year’s Rs445bn. This growth is much below what the government had committed to the International Monetary Fund to achieve the annual collection target.

The only announcement that came from Mr Dar in his brief video message was regarding an extension in the last date for the filing of income tax returns for 2022. The date was extended further until Nov 30 from Oct 31.

Date for filing tax returns extended to Nov 30

The PTI government had done away with the extension of the last date to improve compliance with tax laws and restricted the last date close to the statutory period of 90 days to file their tax returns by Sept 30. Last year, the date was only extended to Oct 15, 2021.

This year’s tax filing date was first extended to Oct 31 and then by another month. Until Oct 31, the FBR received 2.5 million returns as against 2.7m the last year, a decline of 7.4pc.

The revenue collection in July-October stood at Rs2.144 trillion against the projected target of Rs2.148tr. It posted a nearly 16pc growth when compared with last year’s collection of Rs2.148tr in 4MFY22.

Last year not only the projected target was exceeded during the July-October period but also the revenue collection grew 36.6pc when compared with the preceding year’s collection.

These figures would further improve before the close of the day and after book adjustments have been taken into account. The significant revenue increase in income tax is largely the outcome of various policy and revenue measures introduced by the government in the Finance Act 2022.

A major dip was noticed in the collection of duty and taxes at the import stage mainly due to a fall in imports of non-essential items. It is estimated that Rs18bn to Rs19bn was recorded in the customs collection in the month of October.

A major drop was witnessed in a few major revenue spinners like automobiles—CBU and CKD and other machinery due to the import compression policy of the government. The collection at the import stage contribute almost 50pc in the total revenue collection of FBR.

The FBR refunded Rs112bn during July-October compared to Rs91bn paid last year, reflecting an increase of 23pc. This is reflective of FBR’s resolve to fast-track refunds to prevent liquidity shortages in the industry.

On the sidelines of announcing the petroleum prices for next quarter, Finance Minister Ishaq Dar said that the last date of tax returns was made following representations and demands from all stakeholders. He said the date is specifically extended to provide relief to those affected by floods.

Tax collection in the first four months of the current financial year shows that the FBR may not be in a position to achieve the target of Rs7tr for the FY23 due to the daunting challenges, compelling constraints posed by the import contraction, and slowing down of the economy.

Published in Dawn, November 1st, 2022