ISLAMABAD: December Monthly Economic Update and Outlook, Finance Division publication, misreported the Federal Board of Revenue (FBR) collection data, sources in the FBR informed this correspondent.
The 29.6 percent growth in July-October 2023-24 tax collection against the same period of 2022-23 is actually for five months (July-November), instead of the four months noted in the Update.
The rise, sources added, was due entirely to inflation (average 28.6 percent July-November 2023 against 25.1 percent) in the same period last year, advance in tax quarterly payments (usual rise in the first two quarters of a fiscal year), rise in withholding tax rates in the Finance Bill 2024 and raising the standard sales tax rate by one percent – from 17 to 18 percent in the Supplementary Finance Bill 2023. The update revealed FBR tax collection surpassed the target by Rs 27 billion during July-November 2023-24 and at this pace it is expected that tax collection target for the first half of the current year will be achieved.
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In the current month (December) sources in the FBR were confident that collections would amount to 940 billion as (i) corporate returns with tax payments will be filed by 31 December, 2023 and (ii) full payment of advance tax would be due by banks in December 2023. Meeting the revenue target for the last half of the current fiscal year will pose problems as in past years, a view substantiated by tax experts adding that it would not be possible for the FBR to achieve the budgeted target of Rs 9.4 trillion by the end of the fiscal year on 30th June 2024.
The shortfall in revenue collection is expected in the third quarter (January-March) and fourth quarter of 2023-24.
FBR provisionally collected Rs 3,484 billion during July-November (2023-24) against Rs 2,688 billion in same period of 2022-23, reflecting a growth of 29.6 percent. The continuation of taxation measures taken in February 2023 of Rs 170 billion would have a revenue impact of Rs680 billion in 2023-24. The FBR has taken tax measures of Rs 223 billion in budget (2023-24). The additional measures of Rs 215 billion were taken through amended Finance Bill 2023. Therefore, the total revenue impact of all measures including mini-budget would be over Rs 1,115 billion in 2023-24.
FBR’s collection from withholding taxes (under sales tax mode) contributed over 70 percent to total direct tax collections during July-December (2023-24).
Copyright Business Recorder, 2023
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