ISLAMABAD  -   The Federal Board of Revenue (FBR) has requested the government to revise downwards the tax collection target after facing massive shortfall of Rs195 billion during seven months (July to January) of the current fiscal year.

“We have requested the government to revise downwards the tax collection target for the ongoing fiscal year,” said Dr Hamid Ateeq Sarwar, Member  (Inland Revenue - Policy) while addressing a press conference along with Ms Seema Shakil, Member (Inland Revenue - Operations). However, the member did not share the amount for revised tax collection target, which had been proposed to the government.

The government had set Rs4398 billion tax collection target for the current fiscal year. However, the FBR is struggling to achieve the target despite announcing two supplementary finance bills in last five months. The tax collection shortfall has reached to Rs195 billion during first seven months of the year 2018-19. Dr Sarwar said that FBR was expecting shortfall during ongoing financial year due to election, as the revenue collection had also dipped in previous two elections years of 2013 and 2008. 

Sarwar said that ‘Benami Transactions (Prohibition) Act, 2017’ would be operationalized from February 6 or 7. “The FBR has dispatched the draft rules on Benami Transactions (Prohibition) Act, 2017 to the Ministry of Law and Justice for vetting to enforce the law effectively to check Benami transactions in the country,” he said and added that FBR would notify the rules after receiving from the Ministry of Law and Justice. He further said that this law is very harsh. Any property held in ‘Benami’ will be confiscated by the federal government for 90 days initially that would need approval of the Tribunals later.

Talking about tax collection, Seema Shakil said that FBR has collected Rs2.06 trillion during July to January period of the year 2018-19 as against Rs1.995 trillion of the corresponding period of the previous year, showing growth of 3 percent. However, the tax collection shortfall has widened to Rs195 billion during the first seven months of the ongoing financial year. She said that tax collection shortfall in increasing due to the government’s incentive policies including increasing the minimum threshold for income tax to Rs1.2 million per year, reduction in Public Sector Development Programme and withdrawal of taxes on mobile phone cards. One of other reasons behind shortfall in tax collection was lower General Sales Tax on oil products. The FBR had projected to collect Rs279 billion taxes on oil products during ongoing fiscal year as against Rs332 billion of the previous year.

The break-up of Rs2060.8 billion showed that FBR has collected Rs1057.7 billion on domestic sector and Rs1003.1 billion imports. Member Inland Revenue – Operations said that income tax collection on domestic has declined to Rs621.7 billion during July to January period of the current fiscal year from Rs630.5 billion of the corresponding period of the previous year. In income tax, the share of withholding tax has declined to Rs512 billion during current fiscal year from Rs552 billion of the same period of last year. Meanwhile, the FBR has collected Rs798.8 billion as Sales Tax on domestic and imports during July to January period of 2018-19 as compared to Rs805.2 billion of the corresponding period of last year. Similarly, the domestic Federal Excise Duty (FED) on domestic and imports has increased to Rs117.4 billion during current year from Rs105 billion of previous year.

Seema Shakil informed that FBR had issued notices to 6000 non-taxpayers. However, it had created demand of 204 cases and recovered only Rs2.6 billion from them. It is difficult exercise to recover taxes from non-taxpayers.

Hamid Ateeq Sarwar said that FBR had issued notices to over 100,000 non-resident Pakistanis. However, the government is facing problem in it, as some of them had availed the tax amnesty scheme and others had already declared their properties. On a question about Aleema Khan, sister of Prime Minister Imran Khan, Sarwar said that Chief Commissioner Lahore is looking into this matter. However, he said that government would act as per law. He further said that there are confusions on GST on goods and services between federal and provincial governments, which may be discussed in upcoming National Finance Commission (NFC) award meeting. 

He said that FBR had revised the property valuation, which may increase the tax collection on property to Rs15 billion in second half (January to June) of the current fiscal year, which was Rs12 billion in first half (July to December) of the ongoing fiscal year.