Jul-Feb tax collection falls short of target

ISLAMABAD: The Federal Board of Revenue (FBR) has collected Rs7,346 billion during the first eight months (July-February) 2024-25 against the target of Rs7,947 billion, reflecting a massive shortfall of Rs601 billion.

The FBR data revealed that the FBR has provisionally collected Rs850 billion during February 2025 against the target of Rs983 billion, reflecting a shortfall of Rs133 billion.

The tax machinery is required to collect Rs5,624 billion in the remaining four months of 2024-25 against the target of Rs12,970 billion. According to officials, the FBR has projected shortfall of over and above Rs600 billion during the whole fiscal year of 2024-25.

Rs84bn shortfall in Jan collection

During discussions with the IMF, the FBR officials insisted they are making serious efforts to meet the annual target with special focus on enforcement, audit and settlement of pending revenue cases in courts involving Rs2.7 trillion.

The FBR has also proposed reduction in tax rates on beverages, tobacco and real estate sector to increase volumes and transactions in these sectors to generate additional revenue of over 100 billion during April-June (2024-25). However, the IMF has not agreed with these pre-budget tax reduction proposals of the FBR.

The agreed contingency revenue measures between the IMF and FBR in case a shortfall in tax collection of the FBR continues in May 2024 included an annual revenue impact of Rs216 billion.

The eight contingency revenue measures agreed during the “First Review under the Stand-By Arrangement (SBA) SBA” having an annual revenue impact of Rs216 billion are:

(i) Raise the sales tax rate for textiles and leathers tier-1 from its reduced rate of 15 per cent to the standard rate of 18 percent, expected collection of Rs1 billion per month.

(ii) Implement a FED of Rs5 per kilogram on sugar, expected collection of Rs8 billion per month.

(iii) Increase advance income tax on import of machinery by 1 percentage point, expected collection of Rs2 billion per month.

(iv) Increase advance income tax on import of raw materials by industrial undertakings by 0.5 percentage points, expected collection of Rs2 billion per month.

(v) Increase advance income tax on import of raw materials by commercial importers by 1 percentage point, expected collection of Rs1 billion per month.

(vi) Increase withholding tax on supplies by 1 percentage, expected collection of Rs1 billion per month.

(vii) Increase withholding tax on services by 1 percentage point, expected collection of Rs1.5 billion per month.

(viii) Increase withholding tax on contracts by 1 percentage point, expected collection of Rs1.5 billion per month.

Copyright Business Recorder, 2025