Tax collection falls short by Rs101bn in Oct
ISLAMABAD: The Federal Board of Revenue’s collection fell short of target by Rs101 billion in October owing to falling imports and a sharp deceleration in inflation.
The decrease is mainly caused by reduced collection at the import stage and domestic sales tax collection, according to provisional figures released on Thursday.
In October, tax collection reached Rs879bn against the target of Rs980bn, showing a big gap of Rs101bn. However, it saw an increase of 24pc compared to Rs711bn in the same month last year.
Collection in the first four months of FY25 stood at Rs3.442tr, a shortfall of Rs190bn or 5.23pc compared to the estimated target of Rs3.632tr for July-October.
However, the first four months recorded a 25pc increase in revenue over the same period last year, at Rs2.752tr.
FBR paid Rs169bn in refunds to taxpayers in the first four months, up from Rs159bn in the same period last year, representing a 6.28pc increase. The FBR paid Rs23bn in refunds in October compared to Rs30bn in the same month last year, a 23.33pc reduction.
An official announcement said all pending sales tax refund payment orders of exporters amounting to Rs32bn processed faster up to Sep 30, 2024, will be disbursed on Nov 1.
In the budget for FY25, the government projected a revenue target of Rs12.913tr, 40pc higher than the collection made in FY24. The government believes that the additional revenue of Rs3.659tr will be achieved from three main factors.
The government predicts that GDP growth of 3pc, Large-Scale Manufacturing expanding at 3.5pc with inflation at 12.9pc and imports growing at 16.9pc will yield an additional Rs1.863tr revenue in FY25.
The independent economists estimate that real revenue collection in FY25 will be approximately Rs12tr, compared to the projected target of Rs12.913tr.
The overall tax collection may fall short of the target by Rs320bn in the first half of FY25. This decrease in collection will be primarily caused by reduced collection at the import stage and domestic sales tax collection. The only alternative for the government is increasing compliance and bringing traders within the tax net.
According to the statistics, in the second quarter (October-December), sales tax and FED at the import stage are projected to fall by Rs290bn from the expected target, while customs duty will fall by Rs41bn. Lower inflation is predicted to result in a lower collection of Rs123bn in domestic sales tax than the estimated target in the second quarter.
The only tax performing is income tax, expected to generate an additional Rs225bn over the estimated target in Q2.
In the first four months, income tax collections totalled Rs1.616tr, exceeding the target of Rs1.415tr by Rs201bn. The sales tax collection fell short of the target by Rs213bn in the first four months of the current fiscal year, totalling Rs1.236tr.
The customs collection also fell short of the target by Rs96bn as its collection stood at Rs376bn during the months under review. The shortfall in excise duty collection stood at Rs82bn.
Published in Dawn, November 1st, 2024