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January 19, 2021

Tax managers seek cut in annual revenue target

Business

January 19, 2021

KARACHI: Tax managers have proposed the government to revise down revenue target by at least Rs250 for the current fiscal year, considering the downbeat collection during the first half and fast clearance of refunds to support businesses hit by lockdown, people familiar with the matter said on Monday.

Sources told The News that the proposal along with the government’s unwillingness to unveil the minibudget was discussed during a meeting between Javed Ghani, chairman of the Federal Board of Revenue (FBR) and chief commissioners of Inland Revenue department at the Large Tax Office Karachi.

Ghani asked chief commissioners to provide maximum facilities to taxpayers and address their grievances, according to the sources. The chief commissioners said taxpayers are facing problems due to huge number of system generated notices for non-compliance in filing of returns.

The meeting reviewed the revenue collection performance during the first half of the current fiscal year. The government assigned the FBR a target of Rs4.9 trillion for the current fiscal year of 2020/21. The FBR collected Rs2.2 trillion during the first half and it needs to collect Rs2.7 trillion in rest of the year to achieve the target.

Tax officials said the meeting the target is very difficult especially in absence of any additional revenue measures, according to the sources. The target is about 25 percent growth compared to the actual collection of Rs3.9 trillion during the disastrous last fiscal year due to coronavirus lockdown. The FBR had estimated the tax collection loss of over Rs500 billion due to the slowdown in economic activities.

Ghani was urged to get the revenue collection target for FY2021 reduced by around Rs250 to 300 billion. Giving rationale for reduction in tax target, the chairman was informed that tax authorities were issuing all the stuck refunds considering the liquidity problems of the business community due to adverse impact of lockdown.

According to the FBR, in the first six months of the current fiscal year, refunds to the tune of Rs102 billion have been issued compared to Rs53 billion for the same period the last year. This represented an increase of 90 percent in the issuance of refunds. Moreover, refunds of Rs42 billion have also been issued under the government’s corona relief package.

The sources said the meeting also discussed the adverse impact on revenue due to the second phase of coronavirus in the country although the government refrained from imposing lockdown and allowed businesses with certain standard operating procedures.

The impact has already been visible. The FBR collected Rs508 billion during December compared with the monthly target of Rs520 billion. However, the December collection was 8.3 percent higher when compared with Rs469 billion in the same month of the last year.