ISLAMABAD: A report released by the Federal Board of Revenue (FBR) reveals tax collection from sales of furnace oil declined Rs19 billion for FY18 due to a fall in consumption.
Fall in furnace oil demand and a decrease in subsidies contributed to the tax regulator failing to meet its revised annual tax collection target of Rs3.935 trillion for FY18, amassing Rs3.751 trillion reports The News.
The tax regulator in its detailed report attributed the failure of the country’s main taxation intelligence outfit to act against money laundering after suspension of a statutory regulatory order (SRO) by a high court.
The previous PML-N and interim government were unable to get go-ahead from the cabinet to re-enact the suspended SRO notwithstanding the problems faced after the Financial Action Task Force (FATF) designated Pakistan on its grey-list.
As per the FBR, it lost over Rs11.2 billion in revenue stream because of the moratorium on Intelligence and Investigation (Inland Revenue) operations and some SROs.
Due to a moratorium on Intelligence and Investigation operations caused a revenue downfall to Rs1.2 billion in FY18 against Rs12.4 billion in FY17.
Furthermore, the tax regulator reported a fall in domestic sales of sugar and a rise in exports of the commodity on subsidies caused an Rs5 billion slippage in FY18.
Consequently, the reduction in federal excise duty (FED) on natural gas due to depleting supplies of natural gas had a revenue impact of Rs3 billion.
The report highlighted it made excessive refund adjustments during FY18, as the banking sector’s declining profits and fall in withholding tax on telecom sector were the primary reasons for the decline in revenue collection.
Rs19 billion losses because of excessive refund adjustments were reported during FY18. Also, advanced tax/demands from taxpayers were settled against outstanding refunds, contributing to a short realization of Rs19 billion.
Also, the tax regulator in its report stated government meddling in power production contributed to a fall in furnace oil consumption, causing a revenue shortfall of Rs19 billion in FY18.
As per FBR projections, taxes on petroleum products were decreased by Rs10 billion, however, tax experts believe revenue loss under the head stood between Rs60-70 billion.
Reduction in withholding taxes on telecom operators during FY18 cost FBR Rs8.6 billion. Withholding tax rates were decreased by the government from 14 percent to 12.5 percent for FY18.
The FBR faced a fall of Rs8.3 billion under advance tax on capital gains on securities.
Due to a decrease in sales tax on fertilizer and pesticides from 17 percent to 5 percent, FBR suffered Rs8 billion in losses.
Rs1.488 trillion was collected in sales tax during FY18 against the reduced revised projection of Rs1.541 trillion, contributing to a deficit of Rs53 billion.
Federal excise duty collection was recorded at Rs216 billion during FY18 against a revised downward projection of Rs232 billion.
Income tax collection stood at Rs1.441 trillion during FY18 compared to a revised target of Rs1.562 trillion, recording a deficit of Rs121 billion.