ISLAMABAD: The Federal Board of Revenue (FBR) missed its collection target by almost 17.57 per cent, or Rs103 billion, for April owing to a steep decline in imports as well as poor sales tax performance, showed provisional data on Tuesday.
The revenue collection stood at Rs483bn in April as against the target of Rs586bn. This reversal of trend will make it a daunting task for the FBR field formations to make a huge recovery in May-June to achieve the annual target.
However, April’s collection posted no growth when compared with last year’s Rs483bn. A few more billion may come to the government kitty when book adjustments are made in next few days.
As a result of April’s dip, the shortfall widened to Rs381bn as total collection stood at Rs5.638 trillion in 10MFY23 against the target of Rs6.019tr. The tax authorities, however, recorded a 15.67pc growth over Rs4.874tr collected in July-April FY22.
Shortfall swells to Rs381bn in July-April
The growth is much below what the government had committed to the International Monetary Fund to achieve the projected target of Rs7.47tr for FY23.
On Feb 14, the FBR raised the sales tax rate from 17pc to 18pc. Similarly, the excise duty on cigarettes also increased significantly. The revenue projection in three and half months from these two measures is estimated at Rs115bn. The overall new tax measures implemented from March 1 were estimated to raise additional tax payments for government kitty in the range of Rs170bn in the next three months.
At the same time, the Supreme Court on Feb 7 also ordered big taxpayers to deposit 50pc of their super tax with the FBR.
According to an official source, all these measures did not help FBR to achieve its revenue collection target for April. However, the performance of tax machinery remains below expectations despite several revenue measures.
The impact of over 36pc inflation besides the highest-ever depreciation of the rupee is also not reflected in the revenue collection.
The data shows that collection from direct taxes reached Rs2.514bn in 10MFY23 against a target of Rs2.368bn, which was surpassed by 6.16pc. A growth of 44pc was recorded when compared with last year’s collection of Rs1.750tr. One of the major reasons is the collection of the super tax in April following the order of the Supreme Court. The income tax refund paid was Rs14bn in 10MFY23 against Rs11bn in 10MFY22, an increase of Rs3bn.
The sales tax collection stood at Rs2.089tr in 10MFY23 against Rs2.071tr in 10MFY22, reflecting an increase of 1pc. The sales tax collection fell short of the target by Rs280bn or 11.81pc to Rs2.089tr against the target of Rs2.369tr.
The domestic sales tax collection did not perform well despite unprecedented inflation as well as an increase in GST rate to 18pc from 17pc.
The customs collection fell 6pc to Rs752bn in 10MFY23 against Rs798bn last year. This was mainly due to a nearly 29pc decline in overall imports in 10MFY23.
The federal excise duty also fell short of the target by Rs71bn to Rs281bn in 10MFY23 against the target of Rs352bn. However, the excise duty collection posted a growth of 10pc when compared with last year’s collection of Rs256bn in 10MFY22.
Published in Dawn, May 3rd, 2023