Revised revenue target achievable only if activity resumes: FBR

Published April 22, 2020
The Federal Board of Revenue has so far released Rs45bn out of amount allocated under the prime minister's package.— AP/File
The Federal Board of Revenue has so far released Rs45bn out of amount allocated under the prime minister's package.— AP/File

ISLAMABAD: In what appears to be a major fallout from Covid-19, the Federal Board of Revenue (FBR) has linked the collection of the revised target of Rs3.908 trillion for 2019-20 to the resumption of economic activity in Ramazan and Eidul Fitr.

The coronavirus-led slowdown and suspension of business activity have heavily hit the revenue collection, causing a massive shortfall. “We will achieve the revised revenue collection target in case of resumption of business operations,” said Member Inland Revenue Policy and Spokesperson Dr Hamid Ateeq Sarwar on Tuesday.

He along with Member IR (Operations) Seema Shakil briefed the media over the performance of revenue collection and refunds paid to the exporters despite shortfalls.

The International Monetary Fund (IMF) has recently revised the FBR collection target to Rs3.908tr from Rs5.270tr, a reduction of Rs1.362tr to subside the impact of Covid-19 on the economy.

Earlier, the IMF had reduced the collection target to Rs5.270tr from the budgetary projection of Rs5.503tr.

When asked about next year’s revenue collection, Sarwar said the FBR will achieve it because it is estimated that economic activity will resume fully by then. “We will have no issue in reaching next year’s revenue target,” he said.

The five major export sectors — textiles, sports, surgical, carpets, and leather — are the recipients of highest-ever refunds since the ending of the zero-rated regime.

Ms Shakil said the FBR has released Rs175bn refunds between July 1, 2019 and April 15, as against Rs107bn paid over the corresponding period of last year -- an increase of 64pc.

A breakdown of these refunds shows the FBR released Rs96bn in sales tax as against Rs21bn last year, surging by 357pc. However, the income tax refunds declined by 5pc to Rs69bn versus Rs73bn over last year.

At the same time, the customs rebates also fell by 23pc to Rs10bn during the period under review, as compared to Rs13bn.

Besides these refunds, Prime Minister Imran Khan has also announced a Rs100bn package for exporters. Of this Rs70bn was for the FBR and the rest was put at the disposal of commerce ministry to pay Drawback of Local Taxes and Levies.

According to the member, the FBR has so far released Rs45bn out of amount allocated in the PM package.

According to Ms Shakil, the FBR has started releasing income tax refunds to taxpayers in two categories.

In the first (Rs1m to Rs5m), she said that an amount of Rs2.184bn has been processed and will be released on Wednesday and transferred directly to the bank accounts of taxpayers who have updated their IBAN in their returns while 6,000 have been requested to do so.

For the second category (Rs5m to Rs50m), the member said the FBR has finalised an amount of Rs8bn to be released to them. In this category, IBAN has not been updated for refunds worth Rs700m.

Responding to a question, Sarwar ruled out consideration of any general tax amnesty scheme.

He said the FBR has reached out to taxpayers via email because of health risks but has had problems in getting data from banks.

Regarding revenue collection from the oil sector, he said the consumption of oil has dropped significantly. “Our consumption of fuel declined between 35-50pc due to lockdown.”

As a result, the revenue collection from the energy sector dipped by Rs40-45bn so far. He said another Rs15bn revenue deficit in revenue was noted due to reduction prices. With further decline, the FBR estimated Rs75bn revenue shortfall from the oil sector alone by end-June.

Published in Dawn, April 22nd, 2020

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Disregarding CCI
Updated 04 Nov, 2024

Disregarding CCI

The failure to regularly convene CCI meetings means that the process of democratic decision-making is falling apart.
Defeating TB
04 Nov, 2024

Defeating TB

CONSIDERING the fact that Pakistan has the fifth highest burden of tuberculosis in the world as per the World Health...
Ceasefire charade
Updated 04 Nov, 2024

Ceasefire charade

The US talks of peace, while simultaneously arming and funding their Israeli allies, are doomed to fail, and are little more than a charade.
Concerning measures
Updated 03 Nov, 2024

Concerning measures

The govt must seek political input and consensus on the changes it is seeking to make and be open about its intentions.
Short-lived relief?
03 Nov, 2024

Short-lived relief?

POLICYMAKERS must be jumping with joy. At the close of the first quarter of FY25, the budget posted a consolidated...
Brisk spread
03 Nov, 2024

Brisk spread

THE surge in polio cases has reached distressing levels with a tally of 45 last reported, after two cases emerged in...