ISLAMABAD: The tax regulator’s collection grew 14 percent to Rs506 billion during the first two months (July-August) of the current financial year 2018-19, as the new government explores ways to enhance revenue collection.
During July-August FY19, provisional tax collection was recorded at Rs506 billion, said FBR officials and was 14 percent higher than the revenue fetched in the same period of last year (SPLY), reports Express Tribune.
Federal Board of Revenue (FBR) was able to surpass its two-month revenue collection target largely due to receipts of Rs31 billion under the tax amnesty scheme in July 2018.
And tax collection in August went up slightly, rising 5.5 percent year-on-year (YoY) to Rs250 billion, but was less than the monthly aim of Rs281.5 billion.
The newly installed Pakistan Tehreek-e-Insaf (PTI) government has initiated a drive to raise an additional Rs400 billion in taxes, above the yearly target of Rs4.435 trillion for FY19.
Also, there is a huge leeway for raising tax collection since Pakistan faces revenue losses because of under-invoicing, smuggling of consumer goods, sales tax leakages at the domestic stage.
During the last budget presented by the previous government in end-April this year, the parliament had approved an annual tax collection target of Rs4.435 trillion.
The tax regulator needs 15.5 percent growth to reach its target since its collection at end of FY18 stood at Rs3.842 trillion.
However, the tax machinery blames the previous governments Rs135 billion tax relief, restriction on collection of taxes by telecom sector and other issues for the slow rise in revenue receipts.
They believe major tax cuts for individuals had impacted revenue collection and growth.
The newly installed PTI government is mulling measures to reverse the tax cuts and a presentation had been given to Prime Minister Imran Khan.
The measures envisage reducing the effective income tax exemption limit from Rs1.2 million to Rs800,000 and raising the maximum tax rate to around 20 percent, according to sources in FBR.
These recommendations form part of the measures to decrease the forecast 7 percent budget deficit to 5 percent of gross domestic product (GDP) for FY19.
And the plan included additional tax collection of around 1 percent of GDP or Rs385 billion, sources told.
The customs duty collection in the first two months of FY19 (July-August) touched around Rs104 billion, which constituted of one-fifth of the total collection.
A recommendation was put forth to increase regulatory duty in line with maximum rates of World Trade Organisation (WTO) and raise the customs duty rate of 20 percent, the sources shared.
