The FBR has now requested the government to revise downward its revenue collection target but so far the annual target is at Rs 4,398 billion for the current fiscal year. The FBR''s provisional collection stands at Rs 2,060 billion during July-January (2018-19), against the target of Rs 2,251 billion for the first seven months of the current fiscal year. Tax authorities have not specifically pointed out about the figure of Rs 191 billion revenue shortfall, but the data shared by the FBR officials during media briefing reflects the revenue shortfall of Rs 191 billion during the period under review.
The FBR Member Inland Revenue Policy said, "We have requested the finance division to revise downward the target of the FBR." However, FBR Member IR Policy said that the projection of revenue target is only for the internal consumption of the FBR. Normally, he said, the government revises the target at the end of every fiscal year.
The provisional data revealed that FBR''s revenue collection stood at Rs 2,060.757 billion during July-January 2018-19 against Rs 1,995.277 billion collected during same period of last year. Tax wise breakup of 2018-19 showed the income tax collection reached Rs 755.07 billion during the July-January period this year as against Rs754.9 billion over the corresponding period of last year, reflecting an increase of 0.02 percent.
Seema said the decline is mainly due to the drop in collection of withholding taxes from contracts, mobile phone and salaries. She said the revenue collection with corporate returns also declined because of one percent downward revision in the tax rates. FBR Member Inland Revenue Operation Seema Shakil explained that the tax collection fell short of target because of incentives provided by the last regime for salaried class as the taxable limit was increased from Rs 0.4 million to Rs 1.2 million per annum, massive reduction in utilisation of Public Sector Development Programme (PSDP), suspension of withholding tax on mobile phone usage and keeping sales tax on petroleum products at lower side. She said that the sales tax on petroleum products was now brought at standard rate of 17 percent. The sales tax collection on POL products at import stage has decreased by Rs 43 billion so far.
The Member said that major hit in collection came from drastic cuts in the allocation for Federal Public Sector Development Programme (PSDP) which also negatively impacted the revenue collection. The withdrawal of duty on cash transaction might also have a revenue impact.
The FBR Member said that the decline in revenue collection from withholding taxes was compensated from revenue collection from other sources, especially from tax on demand creation. She said that 41 percent growth was recorded in the tax on demand creation which shows the contribution of the field formations.
The FBR Members further pointed out that the tax collection through withholding tax collection decreased to Rs 511 billion in July-Jan period of the current fiscal year compared to Rs 552 billion in the same period of the last fiscal year. Thus, the withholding taxes declined by Rs 40 billion and share of withholding tax came down in direct taxes collection. On the other hand, the tax collection went up through revenue efforts undertaken by the tax machinery as in January it witnessed 18 percent growth, they added.
FBR''s Member IR Policy Hamid Ateeq Sarwar said that the FBR is estimating revenue loss of Rs 106 billion at existing price and existing tax rate on POL products during the whole financial year 2018-19. The Petroleum Development Levy (PDL) was also increased in January 2019 on per litre basis as there is limit on upper ceiling of Rs 30 per litre at the moment and space was available to increase it.
They said that 10 percent collection could be generated through revenue efforts of the FBR and keeping in view the track record, the tax machinery could collect Rs 400 billion through their efforts out of total fixed target of Rs 4,398 billion. The FBR utilises Rs 0.67 paisas for making collection of Rs 100 tax and the share of Inland Revenue Service expenditures comes down to 0.30 paisas in overall collection of the FBR.
The FBR possessed only 300 officers for conducting audit and the capacity constraints are hampering the possibility to move ahead with effective audit, the FBR Member said. The FBR data revealed that total sales tax collection has reached Rs 798.8 billion during the seven months this year as against Rs 805.2bn over the corresponding period of last year, showing a decline of 0.97 percent. This decline was mainly contributed by decrease in sales tax collection on import stage. However, a nominal growth was reported in the sales tax collection on domestic stage.
As per data, the customs duty collection has reached Rs 389.45 billion during the July-Jan (2018-19) period against Rs 330.2 billion over the corresponding period of last year, showing an increase of 17.9 percent. However, the federal excise duty (FED) collection amounted to Rs 117.4 billion against Rs 104.99 billion, reflecting an increase of 11.8 percent. The FBR Member IR Policy said the relief measures might have some short-term negative impact on revenue collection, but they would help increase level of trust among the people and the business community in the government.