ISLAMABAD: The revenue collection during the first two months of FY25 fell short of the projected target by Rs99 billion, raising concerns about the tax administration’s ability to make up the gaps in the months ahead.

The Federal Board of Revenue (FBR) collected Rs1.455 trillion in July-August against the projected target of Rs1.554tr, according to provisional figures compiled by the board on Saturday.

However, the July-August collection grew 20pc compared to Rs1.212tr in the same months last year. This increase is significantly lower than the 40pc growth rate needed to achieve the annual target.

In the budget for FY25, the government projected a collection target of Rs12.97tr, more than 40pc higher than the collection set for FY24. The government believes that the automated revenue collection will be Rs11.1tr in FY25.

In August, revenue collection increased by 18.8pc to Rs796 billion, up from Rs670bn in the same month last year. Revenue in July was also well behind expectations, with only a 22pc increase over the previous year.

Revenues grew by 20pc year-on-year

At the same time, the FBR estimates that the new revenue measures will generate up to Rs2tr in FY25. In FY24, the FBR collected Rs9.285tr against the downward revised target of Rs9.252tr. The budgetary collection target for FY24 was Rs9.415tr.

FBR Chairman Rashid Mahmood Langrial told Dawn that he would focus on enhancing tax enforcement, which is the most challenging task as many sectors, such as the retail sector, were unwilling to enter the tax net.

“The results of my measures to increase revenue will take two to three months,” Mr Rashid said, adding that the results of the enforcement measures will be seen in the coming months.

The chairman has yet to reshuffle the tax field formations and members at the FBR headquarters to bring his team together to improve enforcement.

Last week, the chairman issued a severe warning to field formations to stop involving high-ranking officials, especially political individuals, in the pursuit of lucrative postings. Soon after issuing this direction, the chairman suspended a deputy collector of customs for three months for breaching the order to approach high-ups for posting.

Published in Dawn, September 1st, 2024