The Federal Board of Revenue (FBR) has outlined a series of short and long-term measures to address an anticipated revenue shortfall of over Rs 230 billion in the second quarter (October-December) of FY 2024-25.
October’s collection totaled Rs 877 billion, missing the target of Rs 980 billion by Rs 103 billion, while collections from July to October reached Rs 3,440 billion against the Rs 3,636 billion target, reflecting a Rs 196 billion deficit.
According to a report by Business Recorder, citing sources, the FBR’s initial targets were based on economic assumptions, including anticipated growth in GDP, imports, inflation, and large-scale manufacturing (LSM).
Adjustments to these assumptions have now led the FBR to devise enhanced revenue strategies to counter the expected shortfall. Initial measures were forecasted to yield Rs 1,190 billion through policy actions, Rs 320 billion via enforcement, and Rs 50 billion from retailer schemes.
However, due to macroeconomic shifts, the FBR faced a Rs 147 billion shortfall in sales tax at the import stage for July-September, while income tax collection exceeded targets, reaching Rs 1,230 billion against a target of Rs 1,098 billion.
To sustain revenue flow, the FBR affirmed that refund disbursements were not halted. Following the FBR Chairman’s directives, Rs 32 billion in sales tax refunds processed up to September 30, 2024, were released on November 1.
A new tax enforcement law, vetted by the Law Division, is pending enactment. The Directorate General of Intelligence and Investigation Inland Revenue is also intensifying its anti-tax fraud efforts, including monthly arrests of corporate entities involved in fake invoicing. This initiative has already brought cases totaling over Rs 75 billion in suspected tax fraud.
Targeting tax evasion among wealthy individuals, the FBR is issuing notices to 190,000 high-net-worth individuals, with Rs 7 billion expected in recoveries.
Additionally, the government plans to increase federal excise duty (FED) on sugary drinks and adjust withholding tax on imports and services, projected to generate Rs 10.8 billion monthly or Rs 97.2 billion over the remaining quarters.
An IMF report warns that if the three-month revenue average misses targets by over 1%, further measures, including potential tax increases, will be necessary to meet fiscal goals.
