ISLAMABAD, Dec 17: The Federal Board of Revenue (FBR) is unlikely to meet the target for the first half (July-December) of 2007-08 owing to slowdown in revenue generation.

The FBR first quarterly report released here on Monday said although the downward revised target for the first quarter had been achieved but it might put extra pressure on individual taxes performance in the second quarter.

It said to circumvent any adverse outcome various initiatives had been undertaken especially in the ‘deductions at source’ category within direct taxes and general sales tax (GST).

It was expected that these measures would improve tax collection in the coming months. Simultaneously, a systematic audit programme had also been initiated to deal with delinquencies. Effort to mobilise additional resources through tax-gap analysis, better enforcement and efficiency gains was also continuing.The report, however, said notwithstanding all these initiatives, the final outcome would depend on the strength of the economy. A continuous upswing and a risk-free environment would mean that the resource mobilisation effort of the FBR would also remain on track.

The revenue target for 2007-08 was set at Rs1,025 billion that required 21.1 per cent growth over last year’s collection of Rs846.4 billion. Since it was natural to assume that autonomous growth in tax base would not be sufficient to generate the additional Rs178 billion, certain budgetary measures were also introduced essentially to cover those areas that had escaped tax net for various reasons.

Under the individual tax performance during the first quarter (July-September), there had been a decline in growth of voluntary payment a major component of direct taxes by 19.9 per cent to Rs29.8bn as against Rs37.2bn last year. On the other hand, the second component advance tax registered a healthy growth of 21.6 per cent over previous year, reflecting sustained profitability of the corporate sector.

The share of withholding tax in gross increased to 56.2 per cent in the first quarter from 44.6 per cent in the same quarter last year partly due to reduced receipts on account of voluntary payment, particularly the payments with declared returns and also as a result of substantial growth in withholding tax on contract and supplies.