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A daunting task

A daunting task

ISLAMABAD: A daunting task has been lying ahead for the tax collection machinery as FBR will have to collect Rs 1445 billion in second half (Jan-June) period to display the desired tax collection target of Rs 2475 on its board on June 30, 2014.

In first six months (July-Dec) period of the current fiscal year, FBR had collected Rs 1030 billion, registering a growth of around 17 percent compared to the collection of the last year.

FBR has collected Rs 1030 billion against the desired tax collection target of Rs 1100 billion envisaged for this period indicating a shortfall of Rs 70 billion in first six months.

Although, FBR collection surpassed the projection made by IMF about the prospects of revenue collection but FBR fell short of the desired target of Rs 2475 billion for the whole financial year. IMF had projected that FBR’s collection would be standing at Rs 2345 billion in the current fiscal year.

On tax returns of the corporate sector side, FBR has received around 11,000 returns so far.

According to revenue collection figures compiled by FBR, the Board collected Rs1030 billion taxes from July to December period of this financial year as against the target of Rs1100 billion.

FBR paid Rs35 billion in refunds to the taxpayers in the first half of the fiscal year, according to FBR officials.

However, as compared to the first half of the previous financial year the tax collection was 17 percent higher but yet far below the required growth rate of 28%.

FBR collected Rs375 billion in income tax in the first half of the fiscal year, which was only 37% of the total collection, underscoring increasing dependency on indirect taxation, which is regressive in nature.

IMF had estimated that FBR will collect Rs380 billion in income tax. The sales tax collection in the first half stood at Rs462 billion as against the IMF’s expectation of Rs431 billion. An increase of 1% in the rate of general sales tax remained the main reason behind increase in collection but yet it was lower than the target as the government had increased its rate from 16 to 17 percent in the budget.

The collection on account of customs duties stood at Rs112 billion, 10 billion less than even the conservative assessment by the IMF. The collection on account of federal excise duties remained at Rs70 billion as against the IMF’s expectation of Rs64 billion.

Now FBR will have to put up whole hearted efforts to avoid revenue shortfall in second half of the current fiscal year, otherwise axe will fall on development expenditures in a major way to avoid fiscal slippages under the tight nose of the IMF program.