FBR reduces tax collection target to Rs12.913trn following IMF agreement

Following an agreement with the International Monetary Fund (IMF), the Federal Board of Revenue (FBR) has reduced its tax collection target for fiscal year 2024-25 from the initially planned Rs12,970 billion to Rs12,913 billion.

The News reported, quoting official sources, that the revised target has been set with specific monthly and quarterly goals to achieve the annual figure. For the first quarter of the fiscal year, the tax collection goal is set at Rs2,642 billion, distributed as Rs656 billion for July, Rs898 billion for August, and Rs1,098 billion for September 2024.

The adjustment was made possible after rationalizing expenditures, which allowed for a reduced tax target while maintaining the overall fiscal deficit and primary surplus targets unchanged for the year.

In the previous fiscal year ending June 30, 2024, the FBR collected Rs9,311 billion, surpassing the revised target of Rs9,252 billion. This increase was partially attributed to advance taxes collected in June. 

The IMF has emphasised that failure to meet quarterly targets could trigger a contingency plan requiring additional revenue measures within the year.

In response to the approved 2024-25 budget, the FBR introduced the Tajir Dost Special Procedure, 2024. This new scheme implements fixed tax rates ranging from Rs100 to Rs60,000 per month based on shop valuations in 42 cities nationwide. Of the 25,989 entries logged in various markets, the majority are taxed at Rs100 per month. 

The FBR projects to collect Rs50 billion from retailers this fiscal year under this scheme and plans to launch a media campaign to promote online integration for the initiative.

Additionally, the FBR has been active in addressing tax compliance, dispatching notices to nearly 5 million potential tax evaders identified by consulting firm McKinsey through withholding data. This effort includes following up with individuals who have previously ceased filing their tax returns, although there may be overlaps with past notices.

Requests for comments from the IMF and FBR regarding these developments remained unanswered at the time of this report’s publication.