FBR resorts to strict measures to meet FY2020 revenue target

KARACHI: The Federal Board of Revenue (FBR) has decided to take tough measures, including attachment of bank accounts and assets and arrests, for tax recovery in June – the last month of the current fiscal year, sources said on Tuesday.

The sources said the FBR is invoking recovery provisions in the law to achieve the revised revenue collection target for FY2020.

“The provisions related to tax recovery available in Income Tax Ordinance 2001, Sales Tax Act 1990 and Federal Excise Act 2005 have been invoked to maximise revenue collection target during the current month,” an official at Regional Tax Office Karachi said. The authorities directed field offices to take all possible measures, including attachment of bank accounts and properties, to achieve revenue collection target in the remaining days of June, the official said, referring to a video-linked meeting. “Arrests of defaulted taxpayers may be part of revenue collection strategy.”

The official said higher authorities are consistently demanding the field offices to achieve the revenue collection target set for this month and the current fiscal year. The FBR’s offices have been given Rs415.5 billion as the collection target in June. The FBR collected Rs518 in June last year.

However, the collection during the past three months witnessed significant decline due to adverse impact of lockdown following the COVID-19 and it registered 31 percent year-on-year decline in May. Therefore, in case the collection witnessed same decline in June, then the collection for the month may come at around Rs358 billion.

The full-year collection target assigned to the FBR was Rs5.5 trillion. However, it was first reduced to Rs5.2 trillion, considering an economic slowdown and then it was reduced to Rs3.9 trillion after massive economic challenges due to the more than two months of lockdown.

The sources said usually June is important month every year due to closing of the fiscal year and efforts are accelerated to achieve the revenue collection target. Unlike past years, this year the tax offices were facing multiple issues, including pandemic panic, lockdown and shortage of staff.

The performance of the FBR was not much encouraging during the past fiscal year as the apex tax authority posted negative growth first time in past half a century. The FBR collected Rs3.8 trillion in 2018/19 and failed to reach numbers of the preceding year. The FBR collected Rs3.5 trillion during the July-May period of 2019/20. “The overall collection declined by 0.4 percent, which is Rs15.3 billion lesser than the collection of FY2017/18,” the FBR said. “Last time the negative growth of 2.6 percent in the FBR revenue collection was recorded in 1967/68.” The sources said the FBR would try to avoid another year of negative growth.