FBR going tough on real estate sector to meet tax targets

ISLAMABAD: In last ditch efforts to minimise ever increasing revenue shortfall, the FBR’s Commissioners’ conference on Friday devised its roadmap to clamp down on biggest cases of sales tax and real estate tax evasions in remaining four months (March-June) period for moving towards the desired target of Rs4,398 billion on June 30, 2019.

The FBR will have to collect Rs2,070 billion in remaining four months of the current fiscal year in order to display its envisaged annual tax collection target of Rs4,398 billion. In first eight months of the current fiscal, the FBR had faced shortfall of Rs237 billion and there are increasing fears that the possible shortfall might touch Rs300 to 350 billion till end of the ongoing financial year.

Keeping in view expected massive shortfall, the FBR convened commissioners’ conference here at Board headquarters to devise strategy to minimise this yawning shortfall. After PM’s recent remarks regarding disbanding the reform if it could not be reformed, the top sources claimed that the FBR team was not demoralized rather it was motivated to accept this challenging situation. The each chief commissioner presented his or her strategy and members gave their feedback. It was decided that all big cases of sales tax evasion identified by Intelligence and Investigation wing of Inland Revenues would be pursued vigorously in order to generate multibillion rupees tax demands.

“Another potential sector identified in the conference is real estate where evasion is rampant and we will go against them in terms of taking stern action,” said the official.

Some tax experts argued that the FBR was heading towards revenue shortfall in the range of Rs300 to Rs350 billion for the whole financial year. They cited example that it was rolling stone coming from mountain and no one could stop it from reaching its destination in terms of shortfall.

With this massive shortfall, the overall budget deficit target under PTI led regime is heading towards witnessing highest ever absolute figure in the history of the country by touching 7 percent of the GDP.

The FBR’s collection stood at Rs2,060 billion in first seven months and after adding Rs268 billion in February, the overall collection stood at Rs2,328 billion in first eight months (July-Feb) period of the current fiscal year. The FBR’s collection in same period of the last fiscal year 2017-18 stood at Rs2259 billion. It indicates that the FBR collection increased only Rs 69 billion so far in the current fiscal year.

The FBR high-ups took stance that the decline in collection was attributed due to the drop in withholding taxes from contracts, mobile phone and salaries during the current fiscal year. The slowed down economic activities is hampering revenue growth, said the FBR official and added that they were making efforts to mobilise revenues through generation of tax demands. Thus the share of withholding taxes is on decline which is being compensated through direct taxes. The sales tax at domestic front is showing good growth, they added.