FBR faces revenue shortfall of Rs237b

ISLAMABAD: The Federal Board of Revenue (FBR) has been facing massive revenue shortfall of Rs237 billion in first eight months (July-Feb) period of the current fiscal year as the collection stood at Rs2328 billion against assigned target of Rs2565 billion.

The FBR has now blamed the lingering tension with India as one of the causes for drop in the revenue collection during last three days of outgoing month as it negatively impacted the economic activities in all over the country.

Now it is becoming difficult for the FBR for achieving the desired annual tax collection target of Rs4398 billion for the current fiscal year 2018-19.

Some experts say that the FBR is heading towards revenue shortfall in the range of Rs300 to Rs350 billion for the whole financial year. With this massive shortfall, the overall budget deficit target under PTI led regime is heading towards witnessing highest ever absolute figure in the history of the country by touching 7 percent of the GDP.

In February 2019, the FBR collection fetched Rs268 billion against the fixed target of Rs314.070 billion for the month. The FBR’s high-ups argued that the ongoing tension with India resulted into drop in tax collection in last three days of February 2019 because even Goods Declarations (GDs) were not filed by the importers by end of the ongoing month.

The FBR high-ups are expecting that books adjustments were underway so they were eyeing to collect Rs5 billion more till finalization of revenue figures within next few days. So the overall collection might touch Rs273 billion for February 2019. The FBR’s collection stood at Rs2060 billion in first seven months and after adding Rs268 billion the overall collection went up to Rs2328 billion in first eight months (July-Feb) period of the current fiscal year. The FBR’s collection in same period of the last fiscal year 2017-18 stood at Rs2259 billion. It indicates that the FBR collection increased only Rs79 billion so far in the current fiscal year.

The FBR high-ups took stance that the decline in collection was attributed due to the drop in withholding taxes from contracts, mobile phone and salaries during the current fiscal year. The slowed down economic activities is hampering revenue growth, said the FBR official and added that they were making efforts to mobilize revenues through generation of tax demands. Thus the share of withholding taxes is on decline which is being compensated through direct taxes. The sales tax at domestic front is showing good growth, they added.

Tax collection fell short of target because of incentives provided by the last regime for salaried class as the taxable limit was increased from Rs0.4 million to Rs1.2 million per annum, massive reduction in utilization of Public Sector Development Program (PSDP), suspension of withholding tax on mobile phone usage and keeping sales tax on petroleum products at lower side. The sales tax on petroleum products was now brought at standard rate of 17 percent. The sales tax collection on POL products at import stage has decreased by Rs43 billion so far.