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FBR unlikely to achieve Rs2.23tr target

January 10, 2013

– File photo by AFP
– File photo by AFP

KARACHI, Jan 9: The Federal Board of Revenue (FBR) is facing an uphill task in revenue collection due to falling exports and imports, shrinking industrial activity and budgetary measures taken in the Finance Act 2012.

According high officials of Inland Revenue (IR), the cumulative impact of the budgetary measures which have abolished the Federal Excise Duty (FED) on eight consumers goods and a slash in FED on cement is going to be around Rs50 billion.

FBR is confronted with two issues i.e. a reduced share in cake and the shrinking size of the cake which will make its revenue target of Rs2,230 billion for current fiscal out of its reach, the sources said.

Sources said that field formations are urging the FBR to reduce their targets due to host of factors including transfer of sales tax on services to provinces under the 18th Constitutional Amendment.

The items eliminated from the FED list include lubricating oil base lube oil, sludge, sediment, perfume and toilet waters, beauty or make up preparations, pre-shave and after-shave products and other perfumery products and items under SRO 598 of 2012.

The official data show that oil and lubricants registered in field formations with trade mark of PSO, Pakistan Refinery, National Refinery, Shell Pakistan and others had yield an amount of Rs5.5 billion toward FED during last fiscal (July 2011 to June 2012).

Besides, the government had also reduced up to Rs100 FED on the supplies of cement made by cement manufacturers. The negative impact of this measure would be of around Rs1.48 billion.

The FBR has already suffered revenue loss as sales tax on services has now been collected by Sindh Revenue Board (SRB) and Punjab Revenue Authority (PRA).

Presently five major sectors including banking, insurance, terminal operators, hotels and restaurants and courier services are paying sales tax to provincial governments.

The PRA during first six months of current fiscal is estimated to have collected sales tax of around Rs9 to Rs10 billion on services whereas SRB last fiscal made a debut of Rs22 billion on sales tax collection on services.

Sources felt that the industry, which contributes up to 18.5 per cent towards GDP and gives up to 60 per cent towards revenue collection, is presently operating at 50 per cent of its capacity. This means that revenue collection would also fall, sources warned.