FBR’s revenue collection rises 6.7% YoY, misses target by Rs100 billion for July-October FY19

ISLAMABAD: The tax regulator’s revenue collection went up by 6.7% year-on-year (YoY) in the period between July-October 2018 FY19, collecting Rs1.1 trillion in taxes.

However, the Federal Board of Revenue (FBR) missed its revenue collection target by Rs100 billion, reports Express Tribune.

The provisional revenue collection missed the mark since the tax regulator has claimed it has stopped the practice of taking steps to fill the revenue gap.

Although the tax regulator hasn’t announced its revised monthly collection targets, the Rs1.1 trillion collection fell short by Rs100 billion of the target set.

If the revision is taken into the equation, the four-month shortfall would reduce to around Rs80 billion.

Provisional revenue collection in October fell short of the target by Rs38 billion, as per sources in the tax regulator. Tax receipts for the month were recorded at Rs273 billion, which was 1.1% or Rs3 billion higher than in the same month last year (SMLY).

The monthly collection target for October had been set at Rs311 billion. An increase of less than 7% in revenue collection should be worrisome since the pace was slower than the estimated nominal gross domestic product (economic growth plus inflation) growth of 12%.

With the incoming PTI government, it moved quickly to resolve structural and administrative issues being faced by the tax department in the first four months of FY19.

According to FBR officers, the deficit in revenue collection is due to a slowdown in the economy, income tax relief provided to the salaried class and the decrease in taxable imports due to heavy regulatory duties.

Also, the slow disbursement of funds for the Public Sector Development Programme (PSDP) has impacted the FBR’s tax collection from contractors.

And the apex court’s decision to abolish advance and withholding tax on mobile phone calls alongside a reduction in sales tax on petroleum products had dented the revenue collection, as per FBR authorities.

The tax regulator’s projection says the relief provided by the PML-N administration resulted in an adverse impact of Rs45 billion on its revenue collection.

Thanks to the PTI government’s decision to again increase in income tax on higher income groups with effect from July this year, the FBR expects to recoup Rs20 billion during FY19.