ISLAMABAD - The Federal Board of Revenue (FBR) is optimistic to achieve Rs390 billion target in ongoing month to meet the thrice revised annual tax collection target of Rs3908 billion during current fiscal year.
“We are hoping to achieve the revised tax collection target by the end of June,” said an official of the FBR. He further said that tax collection efforts were badly hit by the slowdown in economic activities due to the coronavirus pandemic in the country.
According to official figure, Rs3,518 billion of revenue has so far been collected in eleven months (July to May) of the current fiscal year, showing an increase of 7.7 percent compared with the 3,266 billion collected last year till May, 2019. “FBR has managed to collect 90 percent of total revenue target of 3908 billion for the current financial year despite coronavirus outbreak, slowdown in economy and impact of lockdown on businesses,” the FBR stated in a statement. Meanwhile, taxes and duties of Rs227 billion have been collected in May, 2020. However, the FBR had missed the monthly target of Rs250 billion in May this year.
In order to meet the revised revenue target of Rs3,908 billion for FY20, the tax authority needs to collect Rs390 billion in the last month (June). The FBR’s officials claimed that tax refunds had also increased in the current fiscal year. The FBR paid refunds of Rs116.961 billion during July-April (2019-20) against Rs65.150 billion during the same period of last fiscal year 2018-2019, reflecting an increase of Rs51.811 billion.
The International Monetary Fund (IMF) had estimated that the government would miss the tax collection target of Rs5.55 trillion by Rs1.647 trillion during ongoing financial year. The Federal Board of Revenue (FBR) tax collection would record at Rs3.908 trillion after COVID-19 against the initial target of Rs5.55 trillion. The FBR would also miss the revised target of Rs4.8 trillion by Rs892 billion.
Due to the massive shortfall in tax collection, the country’s budget deficit would massively increase during ongoing financial year. The IMF in its latest report on Pakistan’s economic situation has noted that the budget deficit would swell to Rs4 trillion in the current fiscal year (FY20) after coronavirus situation against the early projection of Rs3.2 trillion. The primary deficit is now expected to deteriorate to 2.9 percent of GDP in FY 2020 (from 0.8 percent expected earlier) due to a 1.8 percentage point decline in tax revenue relative to the pre-virus baseline, and the needed higher spending to support the health response, social safety nets for the very poor and unemployed.