FBR beats target, collects Rs 2.75 tr in Jul-Oct

The Federal Board of Revenue (FBR) exceeded its revenue target for the fourth consecutive month by collecting Rs 2.75 trillion in July-October and decided to go after one million non-filers of tax returns after receiving a poor response from the People. While the FBR exceeded its July-October tax collection target by Rs 68 billion, it falls short of the total returns filed in the tax year 2022 by nearly two million, or 40% of the existing files. The FBR will not further extend the date for filing annual income tax returns, which ended on Tuesday, Malik Amjad Zubair Tiwana, Chairman, FBR, said while talking to The Express Tribune. The chairman said it had been decided that after fulfilling the legal requirements, the FBR would ensure “compulsory registration” of at least one million people, who were required to file returns but failed to fulfill their obligation. Against the target of Rs 2.68 trillion, the FBR provisionally collected Rs 2.75 trillion in July-October, according to FBR officials. Tax collections were Rs 68 billion higher than the target, helping to avoid any pressure from the International Monetary Fund (IMF) for a mini-budget. FBR achieved 28% growth in tax collection and received Rs 591 billion more than the previous financial year. In the first four months of the previous year, it had revenue of Rs 2.16 trillion. Read SC stops Cantts from levying business tax However, the FBR once again struggled to ensure timely filing of income tax returns. By the time the deadline was extended, it had received only 2.9 million tax returns. In the last tax year, 4.9 million returns were submitted. The laws are lenient as people can file their annual wealth and income tax returns at any time by paying a nominal penalty of Rs 1,000. The FBR chairman said the refunds of 2.9 million were still higher by about 300,000 since October last year. He added that it had been decided that the FBR would ensure mandatory tax registration of at least one million candidates on the basis of withholding tax returns. In cases where people had paid Rs 15,000 to Rs 20,000 in withholding tax but did not file tax returns, the FBR would issue notices to them, he added. About half of the workforce in the district tax offices had been tasked with broadening the tax base and soon these people would start receiving tax notices, Tiwana said. Over 10 million individuals and companies are registered with the FBR, but 7.1 million, or 71%, did not file their annual returns. Last week, the FBR chairman said that based on existing demographics and legal provisions, the scope for increasing the tax base was limited to 10 to 15 million. Low tax collection has remained a chronic issue as taxation has shifted towards the indirect mode which has hit the poor people the hardest. Despite imposing heavy taxes in the last financial year, the FBR collected Rs 7.164 trillion, almost equal to 8.6% of the national economy. One of the reasons was the political patronage of tax evading sectors such as real estate, traders, stock market and exporters. The salaried class paid Rs 71 billion in taxes in the first three months of the current financial year compared to the payment of just Rs 21 billion by exporters. For the current year, Pakistan has agreed with the IMF that it will try to collect taxes of Rs 9.415 trillion. It was the fourth consecutive month that the FBR achieved its monthly target. It collected Rs 707 billion in October against Rs 516 billion in the same month last year. Out of the four types of taxes – income tax, sales tax, federal excise duty (FED) and customs duties, the FBR achieved the income tax and FED targets. Income tax collection stood at nearly Rs1.23 trillion, up Rs335 billion, or 38%, in the first four months of the current fiscal year. The collection was about Rs 190 billion more than the target, offsetting the impact of missed sales tax and customs duty targets. Sales tax remained the weakest sector as its collection was slightly over Rs1 trillion, which was nearly Rs144 billion, or 17%, more than the previous fiscal year. It was Rs 65 billion short of the target due to low tax revenue growth at the import stage. FBR collected Rs 176 billion from FED with a growth of 63%. It was Rs 17 billion more than the four-month target. Customs duty collection was below target by Rs 69 billion. The FBR received Rs 343 billion in customs duty, which was even less than last year. Published in The Express Tribune, November 1, 2023. Like Business on Facebook, follow @TribuneBiz on Twitter to stay updated and join the conversation.

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