ISLAMABAD: To raise its tax revenue collection for FY18, the Federal Board of Revenue (FBR) has withdrawn Rs2 billion from Punjab Revenue Authority’s (PRA) bank accounts in a last-ditch effort to maximize its collection.
The alleged incident is said to have occurred in Lahore where the tax regulator forced National Bank of Pakistan (NBP) to reverse transactions of PRA, according to officials in the FBR headquarter reported Express Tribune.
The aforementioned transactions involving a sum of around Rs2 billion were reversed on June 28th and June 29th respectively said, officials.
Also, this development was also corroborated by Punjab Finance Secretary Hamid Yaqoob Sheikh.
The parliament for the financial year 2017-18 had set a tax collection target of Rs4.013 trillion. The target was revised downwards to Rs3.935 trillion a few months ago.
Tax receipts according to sources for FY18 touched Rs3.841 trillion, although the final figures are still not available.
The tax regulator amassed Rs1.7 trillion or 45 percent of overall revenues at the import stage for the just concluded the financial year 2017-18.
Total collection for FY18 was 14.2 percent higher than FY17 and the country’s tax-to-gross domestic product marginally rose to 11.1 percent, which was lower than the target set.
Although, the tax regulator failed to meet its collection target by Rs172 billion or 0.5 percent of the Gross Domestic Product (GDP), raising chances of budget deficit surpassing Rs2.4 trillion.
The Punjab government is going to take the matter up with the State Bank of Pakistan (SBP) and the federal government, said Sheikh.
According to Sheikh, such practices won’t be welcomed since the issue could have been resolved cordially by both departments.
The provisional finance secretary believed the money belonged to the provincial authority and if there was a problem, the FBR had no right to move without PRA’s approval.
However, FBR officials contest the Rs2 billion deposited in NBP’s accounts in Lahore because of sales tax on goods, was its jurisdiction.
It declared NBP had wrongly credited Rs2 billion into the accounts of PRA and stated they had only reversed the transactions.
But Mr Sheikh said even if the money had been credited wrongly into PRA’s accounts, it could not be taken out without the permission of the account holder.
Furthermore, the Punjab finance secretary claimed NBP was pressured to reverse these transactions, which was a contravention of banking rules.
He added the Punjab government had been calling the FBR to reconcile its accounts with the PRA. Mr Sheikh said FBR owed billion of rupees to PRA for the several years, but the federal government department wasn’t willing to sit down with the provincial authority.
