The FBR quarterly review, issued on Tuesday, showed revenue leakage's in the taxation system for generating maximum revenue in new fiscal year. Despite zero-rating of major export sectors, the department is still receiving sales tax refund claims by zero-rated units, which is an unclear phenomenon.
According to the report, the prevailing instability in economic and political sphere on account of impact of international high oil prices, inflationary pressure and uncertainty in policies provide significant reason for the decline observed in overall revenue collection in July-March 2007-08. Apart from the economic picture, the detailed analysis highlights some of the weaknesses that, if addressed properly, may lead to not only adequate realisation of the target but also to reduce volatility in collection behaviour in future.
Proper implementation of law to restrict the misuse of USAS, particularly, by major taxpayers, speedy and transparent audit to ensure adequate realisation of taxes as per potential, proper realisation of 1 percent SED through effective enforcement, and in-depth examination of continued refund claims related to the zero-rated sectors, all these avenues are, to a great extent, within the domain of the department, the report added.