Govt misses four-month tax collection target by Rs190 billion

Despite implementing unprecedented high taxes this year, the federal government has failed to achieve its four-month tax collection target by Rs190 billion. 

The Federal Board of Revenue (FBR) collected Rs3.440 trillion against a target of Rs3.632 trillion for the July to October period. This gap may lead to either revising the target or introducing a mini-budget to address the shortfall.

This shortfall emerged despite the total tax collections being Rs688 billion higher than the previous fiscal year, primarily boosted by substantial income tax payments. 

In October, the FBR collected Rs877 billion, missing its target by Rs103 billion against Rs980 billion. 

The FBR also reported receiving nearly 5.1 million income tax returns by the last filing date, but enforcement efforts remain hampered by insufficient political will to enforce compliance, especially among traders.

The FBR must maintain a 40% growth pace to meet the International Monetary Fund’s (IMF) annual revenue goal of nearly Rs13 trillion, but the first-quarter performance has been underwhelming. 

Officials now anticipate a cumulative shortfall of Rs325 billion to Rs350 billion in the first half of the fiscal year.

The FBR’s income tax collection reached Rs1.616 trillion, which was Rs201 billion above the target for the first four months of the fiscal year. 

However, it missed targets for sales tax and excise duty by Rs212 billion and Rs83 billion, respectively.

Customs duties also saw a shortfall, collecting Rs374 billion against the target, blamed on flawed assumptions in target setting. 

In a related development, the FBR said that it will disburse Rs 32 billion in pending sale tax refunds to exporters on November 1, 2024.

This move comes after the Chairman FBR directed the speedy processing of refund payment orders up to September 30, 2024.