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October 31, 2016

FBR links losses to unchanged PoL prices

National

October 31, 2016

ISLAMABAD: The FBR has estimated that the tax machinery is going to face revenue loss of Rs575 billion if petroleum prices keep unchanged at existing level during the whole period of the current financial year, The News has learnt.

As four months (July-Oct) had already passed, the FBR estimates showed that the tax machinery could face loss of Rs398 billion in the remaining eight months (Nov-June) period of the current financial year. The FBR is facing gigantic task to achieve the desired tax collection target of Rs3621 billion during the current fiscal year and so far the Board had faced revenue shortfall of around Rs60 billion during the first quarter (July-Sept) period of the ongoing financial year. 

According to working done by the FBR in terms of petroleum prices comparison with regional countries, the POL prices on account of petrol and diesel were lower than regional and neighboring countries. For instance, the prices of petrol and diesel stand at Rs64.27 per liter and Rs72.52 per liter respectively in Pakistan while the prices of petrol and diesel in India are Rs107.82 per liter and Rs90.52 per liter, Bangladesh Rs114 and Rs86.67 per liter, Sri Lanka Rs82.98 and Rs78 per liter and Turkey Rs162.33 and Rs 90 per liter.

“We have estimated that the FBR is going to lose substantial revenues to the tune of Rs575 billion if the oil prices keep unchanged at existing level,” said the official while quoting exact figure of revenue loss estimated by the FBR here on Sunday.

The official said that the Large Taxpayer Unit (LTU) Karachi and Islamabad had faced shortfall of Rs37 billion and Rs22 billion respectively in the first quarter so efforts were underway to improve revenue collection in substantial manner. “But the advances taken by the FBR in June 2016 also caused creation of problems for tax collection machinery in first quarter of the current fiscal year” said the official.

When the FBR’s spokesman Dr Iqbal was contacted for comments, he said that the FBR faced substantial loss due to decreased oil prices that also resulted into witnessing shortfall during the first quarter of the current financial year.

However, independent sources said that the decreased oil prices helped different sector to scale down their cost of doing business in the country but the FBR lacked capacity to collect due taxes after accelerated economic activities. The undocumented economy is another major stumbling block in the way of tax machinery for achieving the desired results, said the official.

However, according to Finance Ministry’s announcement made here on Sunday, Finance Minister Senator Mohammad Ishaq Dar chaired a meeting here on Sunday to review the progress on revenue collection and performance of FBR for the month of October 2016.

Chairman FBR Mr. Nisar Muhammad Khan briefed the Minister with an update on the monthly revenue collection. He also apprised the Finance Minister on the progress on filing of annual tax returns. 

The Finance Minister directed the Federal Board of Revenue to resolve all difficulties being faced by the tax payers in filing of their Tax Returns. He directed that tax filers should be facilitated to ensure timely submission of Tax Returns. Senior officials of the Ministry of Finance and FBR attended the meeting.