Revenue collection jumps 25pc in January

ISLAMABAD: Tax collection by the Federal Board of Revenue (FBR) fell short of the target by almost Rs9 billion in January mainly due to lower collection in domestic taxes and customs duty, provisional figures showed on Wednesday.

The revenue collection in January stood at Rs681bn against a projected target of Rs689.6bn. It increased by 24.95pc when compared with Rs545bn in the corresponding month last year.

These figures would further improve after book adjustments have been taken into account.

During the first seven months (July-January) of FY24, the FBR collected Rs5.150 trillion, exceeding the Rs5.115tr target by Rs35bn. As a result, the shortfall witnessed in January was covered owing to higher collection in December 2023.

The government has projected a revenue collection target of Rs9.415tr for FY24 as against the revised collection of Rs7.2tr in FY23, an incre­a­se of Rs2.219tr or 30pc.

A senior tax official said that the revenue collection’s better performance is mainly contributed by an impressive growth in income tax collection, followed by a better growth in domestic sales tax.

The government hopes to achieve the tax target based on the projected economic growth of 3.5pc, and average annual inflation of 21pc. The autonomous growth in revenue — to come from GDP growth and inflation — is projected at Rs1.76tr in 2023-24.

The revenue collection at the import stage has yet to pick up momentum because of the slowdown of imports. However, the FBR did not release the figures for sales tax refunds during the first seven months of the current fiscal year.

The exporters’ estimation shows that FBR has withheld around Rs700bn in refunds up to January 2024. However, the exporters did not provide the breakup of the total withheld refunds.

The government has already finalised a digital-based system to broaden the narrow tax base of the country. The scheme will be implemented in phases to bring potential taxpayers under the tax net.

The schemes also include professional services providers like lawyers, doctors, engineers, and other services providers to tax their income.

The number of taxpayers in Pakistan is barely 2.3 million. Corporate tax filers are 0.8pc of commercial and industrial electricity users and GST-registered entities are barely 13pc of the 1.4 million taxpayers.