Jul-Aug: there’s Rs98bn shortfall, admits FBR

ISLAMABAD: The Federal Board of Revenue (FBR) Sunday officially admitted that the tax machinery suffered a huge shortfall of Rs 98 billion in tax collection during first two months of 2024-25, as net collection stood at Rs1,456 billion against assigned target of Rs1,554 billion during this period.

According to the data released by the FBR on Sunday, the FBR has collected gross revenues of Rs 1,588 billion for the months of July and August 2024.

Against a target of Rs. 1,554 billion, FBR has collected Rs.1,456 billion in net revenue and refunds of Rs 132 billion (44% more than last year) were issued to exporters to resolve their liquidity problems.

The FBR collected Rs. 593 billion under the head of domestic income tax as compared to Rs. 437 billion during July and August 2024, thereby showing a growth of 36%. A healthy year-on-year growth of 40% was achieved in the domestic sales tax with collection of almost Rs.314 billion. Around Rs.86 billion were collected as Federal Excise Duty (FED) showing a year-on-year increase of 13%. As a result a cumulative growth of almost 35% has been achieved in the collection of domestic taxes.

FBR fails to achieve Rs9.4trn collection target

The FBR has taken 11 percent inflation figure for two months of July-August 2024 against 28 percent inflation during July-August of 2023.

The data revealed that the net income tax collection amounted to Rs 616 billion during July-August 2024 against Rs 489 billion collected during same period of 2023.

The net sales tax collection stood at Rs572 billion in July-August 2024 against Rs 473 billion collected during corresponding period of 2023.

The net collection of customs duty totalled at Rs 172 billion during July-August 2024 against Rs 166 billion collected during corresponding period of last year.

However, on the import side the same momentum could not be maintained due to continued compression in imports. In US$ terms, imports in the country have declined by 2.2% in August 2024 as compared to August 2023. Similarly, the imports during August 2024 in Pak Rupees value also showed a decline of 7% as compared to August last year.

Moreover, the import of high duty items such as vehicles, home appliances, as well as miscellaneous consumer goods such as garments, fabrics, footwear etc have reduced significantly, changing the import mix. This trend has impacted collection of Customs duties as well as other taxes collected at import stage . Despite a modest increase of 4% in collection of Customs duties, FBR’s overall growth in net collection registered a 21% increase on collection of previous year.

The FBR is likely to achieve the revenue targets of the first quarter as both the economic activity and imports are expected to show a healthy turnaround in the month of September due to lower policy rate and other interventions being made by the Government in recent months.

The growth is also likely to show a significant increase as a result of digitisation and other FBR’s reforms which are currently being very keenly supervised by the Prime Minister and the Finance Minister.

These reforms include end to end monitoring of supply chains, automated production monitoring, POS, AI based data integration, import scanning and strict integrity management of the FBR workforce. FBR is also doing a revamp of its business processes to facilitate business growth and ease, FBR added.

Copyright Business Recorder, 2024