FBR collections in KP drop by Rs1 billion

PESHAWAR: The federal revenue collection in Khyber Pakhtunkhwa has faced a shortfall of around Rs1 billion during the first two quarters (July-December) of the current financial year.The federal revenue authorities blame the deficit on the provincial government's measure of imposing one percent Infrastructure Development Cess (IDC) on the imports of the industrial goods into the province.

The revenue shortfall has been recorded in almost all tax and duty heads, including customs duty, sales tax, federal excise duty (FED), advance income tax (AIT) or withholding tax.The major shock in revenue collection has been received by the customs bonds in the province as the industrialists are no more inclined to dump their imported goods in these facilities.

The Khyber Pakhtunkhwa government approved rules in 2014 under the Finance Act to impose IDC and set a collection target of Rs1 billion for the financial year 2015-16.However, soon after the province's measure to levy IDC on the exports, the customs clearance of goods in the province came to a halt. This forced the provincial government to revise the IDC collection during the last fiscal and set at the minimal Rs200 million.

After the increasing practice of clearing imported goods in Karachi to avoid IDC, the provincial government proceeded against the industrial units shying away from clearing their goods in the province.

It was observed that at least 20 industrial units in first quarter of the current financial year 2016-17 were found evading IDC by clearing their goods in Karachi. The provincial government was informed that about Rs21 billion Peshawar-bound goods had been cleared in Karachi during the first three months of the current fiscal.

According to the customs authorities, even during the first quarter of the fiscal the practice of customs clearance in Karachi in place of Khyber Pakhtunkhwa cost Rs820 million to the federal government and Rs30 million to the provincial exchequer.

The Model Customs Collectorate (MCC) Peshawar was given the target of Rs10 billion for revenue collection for the first two quarters of the current fiscal in the province.However, collection in the province couldn't go beyond Rs9.1 billion.The Federal Board of Revenue (FBR) had set the collection target at Rs10.06 billion for July-December quarters of the fiscal but the MCC could pouch Rs9.12 billion recording a shortfall of Rs931.71 million.The FBR collection at the corresponding period (July-December) of the last fiscal 2015-16 also faced a shortfall of Rs809.69 million, which was Rs135.98 million less than the current financial year.Collector MCC Peshawar Qurban Ali Khan, when contacted on the issue of decline in the FBR collections in province, said that the shortfall was mainly because of the provincial government's measure of levying IDC on goods being imported to the province.

"It deserted customs bonds in the province," he added.He agreed to the notion that the deficit would take a toll on the province's share in the revenue receipts from the federal kitty as the ratio of revenue generation from the province would decline."

It may be a pitfall in the province's share as the low collection would have an impact on its share in the National Finance Commission (NFC) award," Qurban Khan added.However, he added that still maximum contribution would come to the province from federal taxes.

The data shared with The News indicated that tax collection in Khyber Pakhtunkhwa experienced Rs453 million shortfall in custom duty, Rs519.35 million in sales tax, Rs50 million FED. A shortfall of Rs91.57 million was suffered in the head of AIT over the first six months of the current fiscal year.