The Federal Board of Revenue (FBR) has accomplished its first-month revenue target for the fiscal year, collecting Rs755 billion, slightly exceeding its target of Rs748 billion. This marks a 15% increase over the same period last year, although it falls short of the growth pace needed to meet the full-year target of Rs14.13 trillion, which requires a 20% increase over the previous year.
The revenue increase was driven by improved performance in indirect taxes, particularly in sales tax and customs duties. However, the FBR missed its targets for income tax and federal excise duty, with income tax collections falling Rs15 billion short of the target.Â
Despite this, the income tax collection was still 5.6% higher than last year. The shortfall was partly due to large advance payments made in June to help meet revised annual goals.
Sales tax collections reached Rs302 billion, surpassing the target by Rs12 billion and marking an 18% increase from the previous year. Customs duties also performed well, with collections rising to Rs106 billion, exceeding the target by Rs14 billion. The increase was attributed to the clearance of cargoes previously withheld by importers, anticipating reduced duties.
Despite these successes, challenges remain, including issues related to new powers granted to tax authorities, such as the ability to arrest individuals suspected of sales tax fraud and the inclusion of large cash expenses in taxable income.Â
These provisions have sparked backlash from the business community, leading to the formation of a government committee to address concerns and propose reconciliatory measures.
The FBR’s leadership has also seen changes, with Chairman Rashid Langrial absent this week due to health reasons and Dr. Hamid Ateeq Sarwar, who recently retired, continuing to oversee operations on a contractual basis.
As the government gradually opens up the economy and lowers import tariffs, imports are expected to rise, which could further impact revenue collections.
