Tax gap widens to Rs374 billion as banks open on holiday

The tax shortfall against the revised collection target reached Rs374 billion for July-January of the current fiscal year, prompting the State Bank of Pakistan (SBP) to direct commercial banks to open on a holiday on Saturday to facilitate additional payments.

Provisional figures show the Federal Board of Revenue (FBR) collected Rs7.15 trillion up to the last working day of the month, lower than the target by Rs374 billion, though about 12 percent higher than the same period last year. Against the original target, the shortfall was Rs597 billion. This was reduced by the IMF as the rate of inflation decreased and the economy slowed down.

For January, the FBR collected Rs986 billion against a monthly target of Rs1.03 trillion. The tax authority expects collections to cross Rs1 trillion by Saturday evening as it continues to press companies to clear super tax arrears.

The FBR anticipates around Rs50 billion more in collections after more companies pay super tax arrears. The Federal Constitutional Court recently ruled in favour of the government in a super tax case, enabling recovery of an estimated Rs190 billion, with at least Rs50 billion already collected.

Under the SBP order, all commercial bank branches, including those handling customs collections, were instructed to operate from 9am to 5pm on Saturday to accept over-the-counter tax payments. Banks were also advised to keep digital payment channels, online banking, mobile apps and ATMs available for uninterrupted tax payments.

Detailed figures show income tax collections of Rs3.5 trillion against a revised target of Rs3.64 trillion, sales tax at Rs2.44 trillion, and customs duty collections at Rs750 billion, each below their respective goals but above last year’s totals in some categories. Federal excise duties slightly exceeded the revised target. Refunds of Rs339 billion were issued, higher than last year’s refunds.