ISLAMABAD: FBR’s tax collections exceeded the target of Rs 6700 billion in the 9 months of the current financial year, while income tax collection increased significantly, reducing reliance on indirect taxation which leads to inflation. .
In July-March, the share of income tax in the total receipts of FBR is almost half with a significant increase. FBR’s 9-month target was 6.707 trillion, according to the provisional data, FBR collected 6.71 trillion during this period, which is 30% more than the same period of last financial year.
FBR’s decision to seize bank accounts of Civil Aviation Authority for recovery of Rs 12.7 billion helped in exceeding the target.
The government granted an annual income tax exemption of Rs 50 billion to the Civil Aviation Authority and the Airport Authority in violation of the IMF program and tax laws, but the FBR did not recognize it and continued to work on the tax recovery plan.
Despite gradual progress towards economic stability, Pakistan needs comprehensive reforms in key tax, expenditure and external sectors, with wholesale, retail, construction and agriculture still the weakest sectors in terms of taxes.
The issue of these low-tax sectors is likely to be taken up in the IMF’s upcoming bailout program, as further taxation of the salaried and corporate sectors faces resistance.
Meanwhile, Prime Minister Shehbaz Sharif instructed FBR not to stop tax refunds to increase revenue, as a result of which a significant increase in tax refunds was seen, 369 billion rupees were paid as refunds in 9 months.
Which is 45% more than last financial year. FBR collected 3.27 trillion in income tax, the target was 568 billion, thus the income tax collection increased by 41% compared to the same period of the previous financial year. The main reason for this increase is the banks, whose profit increased to a record due to high interest rates.
FBR collected 2.24 per cent of sales tax, which is 18 per cent higher than the same period last fiscal, but lower in current inflation terms, indicating leakage in collections. FBR set the target 393 billion less sales tax was collected.
FBR needs to focus on improving its efficiency in this sector. The government has taken several steps to determine the real sales of the commercial sector, but the desired results have not been achieved.
Federal excise duty remained at 402 billion, which is 19 billion less than the 9-month target, but 62% more than the same period last year. The main reason for the increase in the collection of federal excise duty is the tobacco and cement sectors.
FBR failed to achieve the target of customs duties by a margin of 153 billion, receiving only 809 billion in 9 months, which is 16% more than the same period last year. The target of customs duties was fixed on the basis of monthly imports of 5 billion dollars. But the imports remained up to 4.5 billion dollars due to some external problems.
