FBR Misses Tax Collection Target by Rs. 98 Billion in Jul-Aug

The Federal Board of Revenue (FBR) suffered a shortfall of Rs. 98 billion in tax collection during the first two months of 2024-25, as net collection stood at Rs. 1,456 billion against the assigned target of Rs. 1,554 billion during this period. According to the data released by the FBR on Sunday, the FBR has collected gross revenues of Rs. 1,588 billion for July and August 2024. Against a target of Rs. 1,554 billion, FBR has collected Rs. 1,456 billion in net revenue, and refunds of Rs. 132 billion (44% more than last year) were issued to the exporters to resolve their liquidity problems. The FBR collected Rs. 593 billion under the head of domestic income tax as compared to Rs. 437 billion during July and August 2024, thereby showing a growth of 36 percent. A healthy year-on-year growth of 40 percent was achieved in the domestic sales tax with a collection of almost Rs. 314 billion. Around Rs. 86 billion were collected as Federal Excise Duty (FED) showing a year-on-year increase of 13 percent. As a result a cumulative growth of almost 35 percent has been achieved in collecting domestic taxes. The FBR has taken an 11 percent inflation figure for two months of July-August 2024 against 28 percent inflation during July-August of 2023. The data revealed that the net income tax collection amounted to Rs 616 billion during July-August 2024 against Rs 489 billion collected during same period of 2023. The net sales tax collection stood at Rs572 billion in July-August 2024 against Rs. 473 billion collected during the corresponding period of 2023. The net collection of customs duty totaled at Rs 172 billion during July-August 2024 against Rs 166 billion collected during the corresponding period of last year. However, on the import side, the same momentum could not be maintained due to continued compression in imports. In US$ terms, imports in the country have declined by 2.2% in August 2024 as compared to August 2023. Similarly, the imports during August 2024 in Pak Rupees value also showed a decline of 7% as compared to August last year. Moreover, the import of high-duty items such as vehicles, and home appliances, as well as miscellaneous consumer goods such as garments, fabrics, footwear etc have reduced significantly, changing the import mix. This trend has impacted the collection of Customs duties as well as other taxes collected at the import stage. Despite a modest increase of 4 percent in collection of Customs duties, FBR’s overall growth in net collection registered a 21% increase on collection of the previous year. The FBR is likely to achieve the revenue targets of the first quarter as both the economic activity and imports are expected to show a healthy turnaround in the month of September due to lower policy rates and other interventions being made by the Government in recent months. The growth is also likely to show a significant increase as a result of digitization and other FBR reforms which are currently being very keenly supervised by the Prime Minister and the Finance Minister. These reforms include end-to-end monitoring of supply chains, automated production monitoring, POS, AI-based data integration, import scanning, and strict integrity management of the FBR workforce. FBR is also doing a revamp of it’s business processes to facilitate business growth and ease, FBR added.