ISLAMABAD - The Federal Board of Revenue (FBR) has exceeded the tax collection target by Rs176 billion in eleven months of the current fiscal year.

According to the provisional information, FBR has collected net revenue of Rs 4,170 billion during Jul-May period, which has exceeded the target of Rs3,994 billion by Rs176 billion. This represents a growth of about 18 per cent over the collection of Rs3, 549 billion during the same period last year.

The government in consultation with the International Monetary Fund (IMF) had downward revised the tax collection target to Rs4.69 trillion from Rs4.96 trillion. The FBR would have to collect Rs 527 billion in last month (June) to achieve the revised tax collection target. It is worth mentioning here that government had restricted the budget deficit in first nine months (July to March) of the year 2021-22 mainly due to improved tax collection. The country’s expenditures stood at Rs6.64 trillion as against the revenues of Rs4.99 trillion leaving budget deficit at Rs1.65 trillion or 3.6 per cent of the GDP, according to the latest data of ministry of finance.

The net collection for the month of May was Rs 386 billion, against a required increase of Rs 214 billion, representing an increase of 69 per cent over Rs 229 billion collected in May 2020 and 168 per cent of the target. The year-on-year growth of 69 per cent is unprecedented particularly as it is realized on the heel of 57 per cent in April. These figures would further improve before the close of the day and after book adjustments have been taken into account.

FBR collected net revenue of Rs4,170 billion during Jul-May period, which has exceeded target of Rs3,994 billion by Rs176 billion

On the other hand, the gross collections increased from Rs 3,674 billion during this period last year to Rs 4,386 billion, showing an increase of 19.4 per cent. The amount of refunds disbursed was Rs 216 billion compared to Rs 125 billion paid last year, showing an increase of 42.3 per cent. This is reflective of FBR’s resolve to fast-track refunds to prevent liquidity shortages in the industry. The improved revenue performance is a reflection of growing economic activities in the country despite facing the challenge of third wave of COVID-19. However, during the Eid holidays, revenue collection slowed down considerably.

Meanwhile, FBR’s efforts to broaden the tax base are expending apace. Early signs suggest such efforts are bearing fruits. As on 31-5-2021, income tax returns for tax year 2020 have reached 2.93 million Compared to 2.63 million in tax year 2019, showing an increase of 11.4 per cent. The tax deposited with returns was Rs 52 billion compared to only Rs 34 billion last year, showing an increase of 55 per cent.

FBR has also released the information about Tier-I retailers who have been integrated with POS system. According to the information, 10,767 sales points have been integrated with Point of Sales Linked Invoicing System.

Pakistan Customs has collected Rs 672 billion under the head of customs duty in first eleven months of FY 2020-21 against the assigned target of Rs 565 billion and exceeded its target by Rs 107 billion which is 19 per cent more than the assigned target. Whereas during the month of May, 2021 an amount of Rs  64 billion has been collected under the head of customs duty against the monthly target of Rs  57 billion which is again 12 per cent more than the assigned monthly target. It is quite important to mention that an amount of Rs 107 billion was collected more under the head of customs duty in first 11 months of current financial year as compared to FY 2019-20, despite the re-arrival of COVID-19 pandemic and has shown a growth of 19 per cent as compared to previous financial year, which is quite remarkable.  

During May 2021 smuggled goods worth Rs  2.6 billion have been seized so far, while in May 2020 smuggled goods worth Rs  1.5 billion were seized, thus showing a monthly increase of 74  per cent. Similarly, during last 11 months (July 2020- May 2021) of current financial year smuggled goods worth Rs 52.5 billion have been seized as compared to Rs 40.8 billion in Jul 2019-May 2020 of the last financial year thus showing an increase of 29 per cent.

Due to effective enforcement measures taken by Inland Revenue (IR) and Customs, additional revenue of Rs 175 billion is collected in the current Financial Year out of which Inland Revenue (IR) has added around Rs 100 billion.  IR enforcement measures include recovery out of arrears, efficient audits, improved monitoring of sales tax, POS integration, broadening of tax base and monitoring of withholding taxes. Similarly, out of Rs 175 billion whereas the remaining additional Rs 75 billion have come from effective enforcement measures taken by Pakistan Customs. These measures include counter smuggling operations regarding tea, tyres, textiles, electronics, palm oil and POL. Besides enforcement measures, effective administrative measures like auction of goods, control measures against under invoicing, adjudication of court cases, recovery of arrears, DIRBS and audits have also increased the revenue generation. 

During the current Financial Year from July to May, the major sectors for the collection of revenue include auto sector, banks, cement, POL, tobacco and sugar. Tax revenue of Rs 108 billion is collected from the auto sector so far which was Rs 72 billion in the last year showing growth of 51 per cent. Likewise, revenue of Rs 117 billion is collected from the banks in the current year which was Rs 87 billion last year exhibiting increase of 34 per cent. FBR has collected Rs 127 billion from the cement sector in the first eleven months which was Rs 97 billion last year showing increase of 31 per cent. The revenue collected from the POL is Rs 577 billion which was Rs 516 billion last year showing an increase of 12 per cent. From the tobacco sector, FBR has collected Rs 129 billion revenue which was Rs 104 billion last year thus showing an increase of 24 per cent. The revenue from sugar sector was Rs 53 billion which was Rs 31 billion last year showing a growth of 74 per cent.

The Customs duty collections in the current year from the major items include vehicles, Iron Steel and Machinery and mechanical appliances. Customs duty of Rs 98 billion is collected from vehicles which was Rs 52 billion last year showing an increase of 86 per cent. Customs duty from Iron and Steel remained Rs 53 billion which was Rs 42 billion last year showing a growth of 24 per cent. Similarly, Customs duty from machinery and mechanical appliances is Rs 38 billion which was Rs 30 billion last year in the same period thus showing a growth of 26 per cent.

Directorate General of Intelligence & Investigation-IR showed commendable performance during July 2020 to May 2021. During this period, Directorate General forwarded 1,491 Investigation Reports and Red Alerts to the field formations involving revenue amounting to Rs 228 billion. During the period October 2018 to May 2021, Directorate General filed 146 complaints under Anti-Money Laundering Act, 2010 where more than Rs 52 billion were involved. Directorate General seized 7,527 cartons containing 75,270,000 cigarette sticks during the period of July 2020 to May 2021.