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Internal adjustments made to achieve Rs3,621b tax target

By Mehtab Haider
March 26, 2017

Islamabad

Without revising downward overall envisaged annual tax collection target of Rs 3,621 billion for 2016-17, the Federal Board of Revenue (FBR) has made internal adjustments by upward adjusting Customs Duty collection target to the tune of Rs 28 billion and revising downward Inland Revenues (IR) target in the wake of shortfall being faced by Income Tax and sales Tax targets.

“In the wake of ongoing revenue shortfall so far, some internal adjustments have been made by the FBR’s top guns without revising downward the overall envisaged target of Rs 3621 billion for FY 2016-17,” top official sources confirmed while talking to The News here on Friday.

When contacted FBR’s Spokesman Dr Iqbal without sharing any figure said that some minor internal adjustments were made but the overall target of Rs 3621 billion would remain intact. “We will make efforts to achieve the desired target,” he added.

The FBR requires collection of Rs 1706 billion in last four months (March-June) period for achieving the fixed tax target of Rs 3621 billion as so far the tax machinery had netted Rs 1915 billion in eight months (July-Feb) period of the current financial year.

The FBR has been facing revenue shortfall of around Rs 155 billion so far so its top management has come up with new strategy for making internal adjustments in renewed efforts for achieving its highly ambitious tax collection target of Rs 3621 billion.

On eve of budget 2016-17, the FBR has distributed its overall target of Rs 3621 billion by assigning Rs 1558 billion to Direct Taxes (DT) including Income Tax Rs 1538 billion, Workers Welfare Fund Rs 16.947 billion and Capital Value Tax (CVT) Rs 2.297 billion in the federal capital’s jurisdiction. On Indirect Taxes side, total assigned target stood at Rs 2063 billion including Rs 413 billion for Customs Duty, Rs 1437 billion for General Sales Tax (GST) and Rs 213 billion on account of Federal Excise Duty (FED).

Now the Inland Revenues (IR) comprising of Income Tax, GST and FED are facing revenue shortfall during the current fiscal year while collection on account of Customs Duty (CD) largely remained on track in the first eight months so it was decided to revise upward the customs target up to Rs 28 billion. 

So the Customs Duty collection has been assigned to jack up their revenue collection up to Rs 28 billion more in remaining period of the current fiscal year.

One top official of the FBR told this scribe two days back that the tax machinery was making efforts to achieve tax collection target of around Rs 350 billion for March 2017. 

The FBR is facing shortfall on account of GST collection mainly at domestic stage and some more efforts are required to increase tax collection on both GST and Income Tax fronts.

Despite bringing reforms at Customs side, the FBR’s collection showed positive results on this account so it proves that reduction in rate of duty can result into boosting revenue collection. 

Now the FBR requires broadening of tax base in order to achieve its real potential as number of total return filers are still hovering in the range of one million taxpayers so simplification of cumbersome tax procedures are required to lure common citizen to come into tax net. Without broadening of tax base, the practice of increasing rates for existing taxpayers will remain the only option but it will cause unbearable harm to
the overall economic environment of the country because further burdening of existing taxpayers will not provide any solution.