Import compression biggest culprit: FBR marginally exceeds four month tax collection target

ISLAMABAD: The Federal Board of Revenue (FBR) has so far managed to surpass its tax collection target for the first four months (July-Oct) period of the current fiscal with a slight margin but the overall growth in revenue collection has dropped mainly because of import compression.

In a worrisome development, the FBR has failed to materialize its monthly target of Rs534 billion for October 2022 as the provisional collection stood at Rs513 billion till October 31, 2022, so the Board faced a shortfall of Rs21 billion for achieving the desired monthly tax collection target. “Import compression is still there and is badly affecting the FBR’s revenue collection endeavors,” one top FBR official said on Monday on the condition of anonymity. Now the government will have to hold very tough upcoming parleys with the IMF review mission which is expected to take place in mid-November 2022. Although, the exact schedule and venue of the review talks have not yet been decided. “The FBR has provisionally collected Rs2,148 billion in first four months of the current fiscal year against the desired target of Rs2,144 billion, surpassing the target with a slight margin of Rs4 billion,” official data of the FBR available with The News showed on Monday night. However, the FBR did not issue any official press release mainly because the Board could not achieve its monthly target of October 2022. It is expected that the FBR may issue its official press release on Tuesday (today).

The FBR had exceeded its first quarter target with a margin of Rs 26 billion as the Board fetched Rs 1,635 billion against the desired target of Rs1,609 billion. The FBR envisaged a tax collection target of Rs534 billion for October 2022. The FBR has provisionally collected Rs513 billion so it faced a shortfall of Rs21 billion. The FBR’s tax collection is envisaged at Rs7,470 billion for the current fiscal year. The FBR’s monthly target for October 2022 is fixed at Rs534 billion. The FBR had collected Rs 1,635 billion in the first quarter (July-September) period of the current fiscal year against the fixed target of Rs1,609 billion so surpassed the target by Rs26 billion. For September 2022, the FBR collected Rs685 billion against the desired target of Rs684 billion.

In the wake of imports compressions, the FBR faces difficulties in materializing the desired tax collection target for October 2022 as the Large Taxpayer Units (LTUs) in Karachi, the tax collection target was fixed at Rs150 billion for October 2022 and it faced a shortfall for materialising it. It is yet to see how much it faced a shortfall in the outgoing month of October 2022.