Sales tax, FED collection slightly increases to Rs456 billion in July-February

KARACHI: Collection of sales tax and federal excise duty on imported goods amounted to Rs456 billion in the first eight months of the current fiscal year of 2018/19, marginally up over the corresponding period a year earlier, as imports started to scale down.

The data of Large Taxpayers Unit, Karachi, which reports the collection of sales tax and federal excise duty (FED) to the Federal Board of Revenue (FBR), showed on Monday that revenue collection stood at Rs454.7 billion in the July-February period of the last fiscal year.

The import bill posted a decline of 5.17 percent to $32.5 billion in the July-January 2018/19 compared with $34.26 billion in the corresponding period of the last fiscal year, according to the data released by the Pakistan Bureau of Statistics (PBS).

Collection under both the heads by customs collectorates showed deterioration in February. This indicated that import bill for the first eight months, to be issued by PBS this week, may show further decline.

Collection of sales tax at four customs collectorates showed only 0.3 percent growth to Rs450 billion in the July-February period. The collection stood at Rs449 billion in the same period of the last fiscal year.

Sources said decline in sales tax collection was mainly due to reduction in import bill besides lower sales tax rate of petroleum products during the period under review. The performance of revenue collection by the four collectorates was disappointing as only Model Customs Collectorate (MCC) Appraisement posted a seven percent growth during the period.

MCC Port Qasim collected Rs195 billion during the first eight months compared with Rs182.2 billion in the same months of the last fiscal year. Moreover, sales tax collection by MCC Appraisement East posted three percent growth. MCC Appraisement West and MCC Preventive posted decline in sales tax collection of three percent and 22 percent, respectively.

Collection of FED, however, improved nine percent to Rs6.34 billion in the July-February period. The figure was Rs5.84 billion a year earlier. The sources said recent amendment to regulatory regime also reduced the revenue collection at the customs stage.

In February, the FBR issued slashed regulatory duty on various imported raw materials through a statutory regulatory order (SRO 190(I)/2019) to boost the manufacturing and export sector. The sources said flat growth in aggregate collection would negatively impact the total collection of the FBR.

The FBR is facing massive revenue shortfall of Rs237 billion in July-February as the collection stood at Rs2.328 trillion as against the assigned target of Rs2.565 trillion. It seems difficult for the FBR to achieve the desired annual tax collection target of Rs4.398 trillion for the current fiscal year. Tax experts said the FBR is heading towards revenue shortfall in the range of Rs300 to Rs350 billion for the current fiscal year.