The Federal Board of Revenue (FBR) has collected nearly Rs3.4 trillion in taxes in nine months, exceeding its revised target on back of higher collection of indirect taxes that accounted over 63% of the total revenues pooled by the tax machinery.

The FBR has managed to exceed the sales tax and customs duties collection targets but missed the targets of income tax and federal excise duties, showed the figures released by the tax machinery on Wednesday.

The FBR has achieved an overall 10% growth in tax collection that recorded at Rs3.994 trillion in nine months – up Rs317 billion as compared to the same period of the last fiscal year.

Out of nearly Rs3.4 trillion that the FBR collected during the July-March period of this fiscal year an amount of Rs1.53 trillion was generated at the import stage on account of income tax, sales tax and customs duties. This is equal to 45% of the total taxes pooled by the FBR in this fiscal year.

The FBR said that the nine-month collection was Rs106 billion more than its target of around Rs3.3 trillion. However, the Rs3.3 trillion target is on the basis of downward revised annual target of Rs4.7 trillion.

The parliament had approved Rs4.963 trillion tax collection target for the FBR and on this basis its July-March original target was Rs3.384 trillion, which the FBR also achieved.

The FBR said that its net collection for the month of March was Rs475 billion, representing an increase of 46% over Rs325 billion collected in March 2020.

“I commend FBR efforts for achieving historic growth of 41% (actual 46%) in March and overall collection also increased 10% that reflects broad-based economic revival led by the government’s policies,” tweeted Prime Minister Imran Khan.

The FBR said that it also paid Rs177 billion in tax refunds as compared to Rs102 billion paid last year, reflecting resolve to fast-track refunds to prevent liquidity shortages in the industry, it added.

The improved revenue performance is a reflection of growing economic activities in the country despite facing the challenge of third wave of Covid-19. During April-June 2021, it is expected that this revenue performance would be improved substantially compared to 2020 when economic activities were disrupted due to Covid, said the FBR.

Tax-wise collection

The FBR pooled Rs1.24 trillion in income tax in nine months, which was higher by Rs89 billion or 7.7% over the same period of the last fiscal year. However, the tax machinery failed to achieve its target by a margin of Rs50 billion. The income tax collection was just 36.7% of the total collection and far less than the PTI’s goal of increasing it to 45%.

Under the head of sales tax, the FBR collected Rs1.4 trillion, showing a growth of 13.2%. The FBR exceeded its nine-month sales tax collection target by Rs94 billion. Out of the total sales tax collection, as much as 58% was at the import stage.

Similarly, the FBR also exceeded its customs duties target by Rs90 billion and collected Rs540 billion with a growth rate of 11%.

During the last financial year 2019-20, an amount of Rs482 billion had been collected as customs duty in first nine months.

Overall Pakistan Customs collected Rs1.53 trillion at the import stage under the heads of customs duty, sales tax, withholding tax and federal excise duty, which is equal to 45% of the total FBR’s collection.

The FBR collected Rs196 billion on account of federal excise duties – up by 4%. But it missed the nine-month target by Rs25 billion.

The FBR said that its efforts to broaden the tax base are expanding apace and the income tax returns for tax year 2020 have reached 2.8 million compared to 2.6 million last year, showing an increase of 8%. The tax deposited with returns was Rs51 billion compared to only Rs33 billion, showing an increase of 54%.

But this claim is not verified by the FBR’s own publications like Active Taxpayers List and quarterly revenue reports.

The FBR said that Pakistan Customs has initiated a focused counter-smuggling drive. During March 2021, smuggled goods worth Rs3.634 billion have been seized while in March 2020 smuggled goods worth Rs2.74 billion were seized, thus showing a monthly increase of 39 %.

Similarly, during the first nine months of current financial year smuggled goods worth Rs46 billion have been seized as compared to Rs27.7 billion, showing an increase of 66%.

Published in The Express Tribune, April 1st, 2021.

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