The shortfall of Rs 38 billion in revenue collection of the Federal Board of Revenue (FBR) would not result in any immediate downward revision in the tax estimates of Rs 1952 billion for 2011-12. Sources told Business Recorder here on Monday that the net revenue collection of the FBR stood at Rs 1550 billion for 2010-11, against the annual target of Rs 1588 billion, reflecting a shortfall of Rs 38 billion.
The reconciled figures of the FBR amounted to Rs 1550 billion during 2010-11. The final chart of the revenue collection for 2010-11 is also expected in the next few days. However, this would not result in any immediate downward revision in the tax projections of Rs 1952 billion for 2011-12.
According to sources, the status of revenue collection during first half (July-December) of 2011-12 would clear the picture about any possible downward revision in the revenue collection of the FBR. The key factors, like growth, inflation, performance of large-scale manufacturing and other economic indicators would have direct impact on revenue collection. Even if only large-scale manufacturing shows improvement, there would be jump in revenue collection during 2011-12. Based on six months'' performance, it would be analysed whether there is need for revision in the revenue collection target of Rs 1952 billion for 2011-12.
The Revenue Advisory Council (RAC) and donors had estimated that the FBR would be able to collect around Rs 1530 billion during 2010-11. As compared to the expectations of the RAC, the FBR was able to collect Rs 1550 billion during 2010-11. The FBR has collected Rs 20 billion more than the estimates of the RAC. It is expected that the shortfall would be further reduced by Rs 2-3 billion after book adjustment with the Accountant General office.
Responding to a query on over-ambitious target of Rs 1952 billion, sources said that the revenue estimates have been based on taxation measures taken in March 2011 and later withdrawal of exemptions in budget (2011-12) and other tax measures/enforcement measures. Depending on the economic situation, imports and other important factors would determine the real course of revenue collection during 2011-12. However, there is no possibility of any immediate revision in revenue collection target for 2011-12.
When asked whether Rs 1588 billion was taken as baseline for fixing of target for Rs 1952 billion for 2011-12, sources said that the expected collection of Rs 1588 billion was only one of the factors while fixing the target. The withdrawal of exemptions and zero ratings, growth in revenues and administrative measures were also dully considered for fixation of target of Rs 1952 billion for 2011-12.
It is important to mention that the net revenue effect of the taxation and administrative measures would be around Rs 23 billion during 2011-12. The aggregate of the revenue effect of all taxes in budget (2011-12) showed that the FBR will take administrative measures of Rs 50 billion in 2011-12. The net effect of revenue measures and relief measures comes to around Rs -27.037 billion during current fiscal year. Resultantly, the net revenue effect of all taxes and administrative efforts would be nearly Rs 23 billion in 2011-12.
The FBR has provided relief of Rs 2.137 billion through tariff rationalisation. Sales tax and federal excise measures would provide relief of Rs 52.350 billion. Sales tax and excise measures would generate Rs 31.250 billion. The net revenue impact of sales tax and federal excise is Rs -21.100 billion. The income tax measures would give relief of Rs 3.8 billion to the business community and general masses. The total taxation measures would generate revenue of Rs 31.250 billion and relief measures totalled at Rs 58.287 billion, reflecting a net effect of Rs -27.037 billion in 2011-12.
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