ISLAMABAD: The Federal Board of Revenue (FBR) collection in the first half (July-December) of the current fiscal year stood at Rs2.194 trillion, missing the projected Rs2.21tr target by Rs16 billion, provisional data showed on Thursday.

However, revenue collections were increased by five per cent year-on-year when compared to Rs2.092tr during the same period last year.

For achieving the annual target, the FBR will have to collect Rs2.769tr during the second half (January-June) of 2020-21.

On a monthly basis, the FBR collected Rs504bn in December as against the projected target of Rs541bn, showing a shortfall of Rs37bn. However, it grew by 7pc when compared to Rs469bn collections during the same month last year.

The growth in December is usually higher owing to the corporate income tax payments.

Special Assistant to Prime Minister on Revenue Dr Waqar Masood Khan told Dawn that he was expecting Rs10bn more in next few days which will add to the December collections. He said that the FBR is close to the target keeping in view the prevailing situation. The revenue collection is the reflection of the economic growth in the country.

“We are still confronting the Covid-19 impacts”, he added.

Dr Masood further said that he was expecting higher growth in revenue collection in the second half especially March onwards. He said the target was set on the assumption that there will be no Covid-19. Despite the pandemic, he argued the collections have registered growth.

He said that there will be no revision in the annual target. “We are working on that thing; not to revise the target”, he said while adding the FBR will be very close to the target by the end of fiscal year. As the economy accelerates, there will be better results, he said.

But contrary to this, it is also believed that slower performance in the FBR is also due to lack of government interest in running affairs of the tax machinery on an ad-hoc basis. The much-talked about tax reforms and controlling corruption in the FBR were mere claims as the government has not taken any action to overhaul the workings of the board.

Before coming into power, the ruling party had vowed to introduce tax reforms and raise tax from elites but has failed to make any changes and remains focused on indirect taxes similar to the tactics used by previous governments.

Despite the introduction of several measures, the realisation of income tax is much below expectations. The income tax collection during the July-December period stood at Rs823bn as against the target of Rs905bn, showing a shortfall of Rs82bn.

The income tax collection showed a growth of 4pc when compared with collection of Rs794bn during the same months last year.

Meanwhile, the sales tax collection jumped 13pc to Rs1.013trn in the first half of the current fiscal year from Rs892bn in the same period last year. However, the target was projected at Rs869bn, much lower than last year’s collections. The growth came as a result of rise in fuel prices, increase in imports and revival of economic activities during the period under review.

The federal excise duty (FED) collections were up 1pc to Rs127bn as against Rs126bn last year. The FED target for July-December was set at Rs149bn, which was missed by Rs22bn.

Moreover, customs collection recorded no growth as it stood at Rs334bn during the July-December period. The target projected under customs was Rs288bn, which was surpassed. The customs duty in December saw a growth of 8pc over last year and also surpassed the projected target.

The payment of Rs102bn refunds in the first half of this fiscal year — an increase of 90pc over last year’s payment of Rs54bn — suggested a sharp acceleration in economic activity leading to revival of industrial production.

The government, while preparing the budget for the ongoing fiscal year, had assured the International Monetary Fund to raise Rs4.963tr in FY21 against Rs3.989tr collected in FY20 — a projected increase of 24.4pc.

Published in Dawn, January 1st, 2021