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September 14, 2017



Tax collection rises 21 percent to Rs449 billion in July-August

ISLAMABAD/KARACHI: Tax collections have risen 21 percent in the first two months of the current fiscal year, seemingly giving the government an elbow room in wake of some heavy spending lined up.

The Federal Board of Revenue’s  (FBR) net collection increased in July and August 2017 on account of regulatory duty on luxury items , improved sales tax at domestic stage and impact of an increase in oil prices.

The FBR’s provisional collection at the national level amounted to Rs449 billion in July-August, up 23 percent as compared to around Rs365 billion collected in the similar period of the last fiscal year.

Government set a tax collection target of four trillion rupees for the apex tax authorities for 2017/18 fiscal year, which is 19 percent more than the collection of Rs3,362 billion collected in 2016/17.

An official said the tax revenue collection soared 21 percent in the July-August period of FY2018 owing to enhanced economic activities and amendment in laws brought through the budget for the current fiscal year. “The FBR will have to sustain this upsurge trends in revenue collection in October and beyond as it will be a real test of the tax collection machinery,” a top tax official told The News on Wednesday. Last fiscal year, the government did not increase oil prices for almost seven months in a row that had adversely affected FBR’s performance.

The government, in last June, enhanced regulatory duty on luxury items with the intention to curtail the trade deficit. However official data showed that imports of luxury goods are unabated and revenue collection on such imports went sharply up. It also helped collection on account of sales tax at import stage and withholding taxes. A government statement said finance minister Ishaq Dar on Wednesday chaired a meeting of tax officials to review progress of revenue collection in the current fiscal year of 2017/18. Special assistant to Prime Minister on Revenue, Haroon Akhtar was also present.

Tariq Pasha, chairman FBR gave an update on the state of revenue collection in July-August 2017-18 and informed that over 24 percent growth in gross revenue has been registered in the first two months as compared to the corresponding period in the last fiscal year of 2016-17.

Pasha also informed the meeting that Rs36 billion of stuck up refund had been released in the first two months of the current fiscal year as against Rs17 billion worth of refunds paid in July-August of last fiscal year  “The net collection after refunds shows an increase of 21.02 percent over the last fiscal year,” the statement quoted Pasha as saying.

Meanwhile, the Large Taxpayers Unit (LTU) Karachi, a key revenue arm of FBR, collected Rs157 billion during July-August as compared to Rs119 billion in the corresponding period of the last fiscal year.

“The measures to boost economic activities started yielding positive results,” a LTU official said. “This resulted in profitability of corporate sector and subsequently led to increase in tax contribution.”

LTU Karachi contributes around 35 percent to the FBR’s total tax revenue collection. Sources said LTU Karachi is to pull together approximately Rs1.5 trillion in view of the annual revenue target.

The sources said the tax department needs to gear up efforts in the current month to meet its quarterly (July-September) revenue target of Rs257 billion. LTU Karachi has to collect Rs103 billion to make it out.

The unit collected Rs83 billion in September 2016 and the collection of the first quarter of the last fiscal year was Rs202 billion. A senior tax official, however, was sanguine about the target achievement.  

“The target for September 2017 is achievable as advance tax for the first quarter would be due on September 15 for individuals and September 25 for corporate entities,” said the official. LTU officials said FBR is giving priority to wind up pending audit cases to generate tax revenue during the current fiscal year to meet the target.

The amendments in laws brought in the last budget also supported the unit’s revenue collection efforts, they added.

Multiple provisions were introduced in the tax laws during the last budget to boost revenue. The measures included taxation on dividend, rationalisation of tax rates on interest income, changes in capital gain tax regime, and withdrawal of tax credit to manufacturers.

Besides, changes in sales tax rates on petroleum products also helped in higher revenue collection during the period, the officials said.