Despite odds FBR net collection stands at Rs572bn in May 2023

ISLAMABAD: The Federal Board of Revenue (FBR) stated on Thursday that despite all odds, the FBR made a net collection of Rs572 billion for May 2023. In an official statement issued here on Thursday, the FBR stated that the tax collection machinery has put effort to achieve the revenue target for the month of May 2023 by collecting Rs605 billion as gross revenues. Against a target of Rs621 billion, FBR was able to collect Rs572 billion net revenue, while refunds amounting to Rs33 billion were issued.

It collected Rs205 billion under the head of domestic income tax compared to Rs131 billion in May 2022, thereby showing a growth of 57 percent. A healthy year-on-year growth of 28 percent was achieved in the domestic sales tax with collection of almost Rs100 billion.

Around Rs41 billion were collected as Federal Excise Duty (FED), showing a year-on-year increase of 32 percent. However, a cumulative growth of almost 44 percent has been achieved in the collection of domestic taxes. This is despite the fact that the economy has slowed down and GDP growth rate has been revised downward. Cumulative growth of almost 44 percent has been achieved in the collection of domestic taxes. However, on the import side, the same momentum could not be maintained due to unprecedented compression in imports. In US dollar terms, imports in the country declined by 37 percent in May 2023 compared to May 2022.

Moreover, the import of high duty items such as vehicles, home appliances, as well as miscellaneous consumer goods such as garments, fabrics, footwear, etc, have been drastically reduced, changing the import mix.This has impacted collection of Customs duties and other taxes. Despite 18% dip in collection of Customs duties, and 11 percent decline in overall tax collection at import stage, the FBR’s overall growth was registered at 16 percent compared to previous year.

However, independent experts say that the FBR did not bother to share the official figures on account of its collection related to Customs Duty in the last month (May 2023). The FBR has also not shared the overall tax collection of the first eleven months (July-May) figures for the current fiscal year because the tax machinery faces a gigantic task for materializing its revenue collection in the last month (June) in order to display its desired tax collection target of Rs7,640 billion, which simply seems impossible keeping in view the dismal performance of the Board in the last few months. It is a fact that the GDP growth contracted and stood at 0.29 percent for the outgoing financial year but the CPI-based inflation has gone up to 38 percent for May 2023, so the higher nominal growth did not translate into revenue collection figures despite massive devaluation, additional taxation measures of Rs800 billion including mini-budget to fetch Rs170 billion additional taxes and raising GST rate from 17 to 18 percent.