Saturday, December 9, 2023

FBR July tax collection exceeds Rs68b

FBR (Federal Board of Revenue) has exceeded July’s tax collection target by Rs68 billion, thanks to more than half of the collection at the import stage, putting it on track to meet the yearly target of Rs5.829 trillion.

However, more than half of the tax collection at the import stage is consistent with the government’s new strategy of depending on indirect taxes to meet the yearly target after failing to increase the tax base during its first three years.

According to data produced by the revenue board on Friday, FBR raised more than Rs 410 billion in the first month of the fiscal year 2021-22, compared to a monthly target of Rs 341.7 billion. The monthly collection represented 7% of the annual target.

The preliminary revenue of Rs 410 billion was 36.5% or Rs 109 billion higher than the revenue produced in the same month of the previous fiscal year.

FBR got off to a firm start for the current fiscal year, as it did the previous fiscal year, exceeding the July target by Rs 57 billion. FBR collected Rs 210 billion in the import stage.

The country’s reliance on import taxes and tariffs may lead to inflation, as taxes paid at the import stage are generally recovered by raising prices. These import tariffs are also raising the cost of energy and fuel goods.

The administration had included a 17 percent sales tax on crude oil imports in the budget. To meet the tax objective, it also increased the customs duty rate on gasoline imports from 5% to 10%.

Other indirect measures included in the budget included a 75-paisa federal excise charge on each telephone call lasting more than five minutes.

The income tax’s portion of overall revenue has dropped dramatically to 32.7 percent, putting an additional hardship on those with less financial resources.

FBR collected 67.5% of indirect taxes, or Rs 277 billion, from the three main sources of indirect taxes: general sales tax, customs tax, and federal consumption tax.

The Pakistan Tehreek-e-Insaf (PTI) election manifesto vowed to increase the percentage of direct taxes from 38% to 45%.

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