FBR surpasses July revenue target

Tax watchdog says figures highest ever in the period under review and will further improve after book adjustments taken into account

ISLAMABAD: The Federal Board of Revenue (FBR) collected a net revenue of Rs458 billion during July 2022, Profit learnt on Sunday.

According to the details, the collection has exceeded the target of Rs443bn set for July by Rs15bn, representing a growth of about 10 per cent over the collection of Rs417bn during the same period last year (1MFY22).

These figures, the highest ever in the month of July, will further improve after book adjustments have been taken into account, as per a statement released by the tax agency.

On the other hand, gross collection increased from Rs438 billion during July last year to Rs486 billion, showing an increase of 11pc. Likewise, the amount of refunds disbursed during July was Rs28 billion compared to Rs21 billion paid last year, showing an increase of 32pc.

This is reflective of FBR’s strong commitment to fast-track refunds and thereby prevent liquidity shortages in the industry, the tax watchdog said.

The revenue increase in July is largely the outcome of various policy and revenue measures introduced by the government in Finance Act 2022. Unlike in the past, there is a visible focus on taxing the rich and affluent. Owing to this paradigm shift, the domestic taxes contributed 55pc in collection while import taxes remained 45pc. This has reversed the trend as previously taxes at import stage were 52-53pc of overall collection.

Similarly, the growth in domestic income tax is almost 31pc which is a remarkable shift towards direct taxation in addition to a significant upsurge in advance tax collected during July as well as an 118pc increase in advance tax on sale of properties u/s 236-C due to enabling of a withholding provision applicable irrespective of the holding period. A 40pc increase in advance tax u/s 147, especially from banking companies, is due to a change in tax rate.

Furthermore, an increase in the rate of FED on cigarettes has paid its dividends. The FED from tobacco has registered a record growth of over 47pc or Rs2.6 billion and the corresponding increase in sales tax from tobacco sector has registered a record 67pc growth. The increased FED on international air travel has also registered growth of over 200pc.

Moreover, Pakistan Customs has collected Rs67 billion under the head of customs duty during July against Rs65 billion collected during the same period last year, registering a marginal growth of 2.58pc. However, it suffered a dip against the target of Rs77 billion fixed for the month due to the import compression introduced by the government to control the outflow of US dollars whereas FBR suffered from a loss of about Rs11 billion in sales tax against zero rating of POL products.

It is pertinent to mention that income tax returns for tax year 2021 have reached Rs3.4 million compared to 3.0 million in tax year 2020, showing an increase of 13pc. The tax deposited with returns during 2021 was Rs76 billion compared to Rs52 billion in 2020, showing a significant increase of 46pc.

Meanwhile, building further on its ongoing drive to integrate Tier-1 retailers across the country, around 23,265 point of sale terminals have been integrated with the real time POS reporting system of FBR.

 

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Shahzad Paracha
The writer is a member of Pakistan Today's Islamabad bureau. He can be reached at [email protected]

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