The Federal Board of Revenue (FBR) has suffered massive revenue loss of Rs 22 billion from low tax collection on the import of old and used vehicles during July-January (2019-20) due to change in import policy for secondhand cars.
According to a document of the FBR on factors responsible for affecting revenue collection during 2019-20, change in the import policy for used vehicles has negative revenue of around Rs 22 billion (all taxes at the import stage.
The FBR said that loss of revenue due to sharp drop in imports is around Rs 307 billion which is much more than revenue shortfall of Rs 101 billion during July-January (2019-20).
According to the FBR, other factors which have adversely affected revenue collection by the FBR are sharp decline in large scale manufacturing. Auto sector is a case in point which has shown decline of 39 percent in income tax and 28 percent in sales tax, when compared with last year. Against expected collection of Rs 88 billion, only Rs 47 billion has been collected during July-January (2019-20), resulting in budgetary loss of more than Rs 40 billion.
The FBR said that lower acceptability of documentation of economic transactions is also one of the factors which have adversely affected revenue collection. The introduction of the new customs slab of zero percent IN Pakistan Customs Tariff for raw materials and intermediary goods has revenues to decline by around Rs 8.4 billion, the FBR added.