ISLAMABAD - The Federal Board of Revenue (FBR) has to collect Rs1921 billion in just five months (February to June) to meet the annual tax collection target.

"The FBR has collected Rs1700 billion during seven months (July to January) of the ongoing financial year," Dr Muhammad Iqbal, official spokesperson for the FBR told The Nation. Over the same period of the corresponding period of the last fiscal year, the revenue collection recorded growth of 7 percent, as FBR collected Rs1581 billion during this period. He said that FBR had collected Rs228 billion in the month of January. The government had fixed monthly target of Rs233 billion, reflecting a shortfall of Rs5 billion.

The government had fixed tax collection target at Rs3621 billion for the present financial year (July 2016 to June 2017). However, the FBR is struggling to achieve the target due to reduction in sales tax on oil products, fertilisers, zero-rating for five export-oriented sectors and payment of tax refunds to exporters. Overall tax collection shortfall in seven months has risen to Rs140 billion.

The FBR could lose Rs50 billion in next five months due to the incentive package announced by the government to boost the country's exports. Due to the higher tax collection shortfall, the government would struggle to keep budget deficit at 3.8 percent of the GDP (Rs1.276 trillion) during current fiscal year. The country's budget deficit remained at Rs804.2 billion (2.4 percent of the GDP) during first half (July-December) of the ongoing financial year.

The government has not taken any decision yet either to revise the tax collection target downward or to take additional revenue generation measures to reach the annual target.

"We are not passing the full impact of increasing oil prices to the masses by reducing the sales tax, which is putting negative impact on revenue collection," said another official of the FBR. He added that POL prices had caused revenue loss to the tune of Rs50 to Rs60 billion during ongoing financial year. Similarly, he said that reduced rate of GST for fertiliser is also causing loss to the revenue collection on the monthly basis.