Federal Board of Revenue (FBR) is struggling to achieve the twice-revised revenue collection target during the ongoing financial year 2012-2013 despite announcing tax amnesty schemes and eliminating tax exemption on various sectors, it was learnt on Wednesday.
Sources informed that FBR has to collect Rs 782 billion during the last quarter (April-June) of the current fiscal year in order to meet the revised target of Rs 2126 billion. The FBR has to collect Rs 260.67 billion in each month of the last quarter (April, May and June) of the ongoing financial year to reach the revised target, which is challenging for the tax department at the time when general elections are around the corner. FBR has provisionally collected Rs 1344 billion during the nine months (July-March) of the present financial year 2012-2013 as against Rs 1260 billion of the corresponding period of the last year, showing an increase of 6.7 percent.
Meanwhile, FBR has missed the revenue collection target in March 2013, as it collected Rs 182 billion last month against the target of Rs 200 billion. However, revenue collection showed growth of 22 percent in March 2013 if compared with Rs 150 billion of March 2012.
"The government is trying hard to reach the revised tax collection target during the current fiscal 2012-2013," said an official of FBR while talking to The Nation. He further said that tax collection was lower due to the declining trend in inflation, large scale manufacturing sector's growth and decline in investment.
Similarly, the narrow tax base, fall in imports and the overall situation in the country are the major reasons behind lesser tax collection and FBR is experiencing difficulties in attaining the tax targets set out by the government, he added.
FBR recently announced two tax amnesty schemes, one for regularising the non customs- paid vehicles and second for textile sector to clear their past sales tax liabilities, to generate additional revenue within ongoing fiscal year to reach the annual tax collection target. FBR has generated Rs 10 billion through amnesty scheme announced for vehicles, which are brought into the country without payment of custom duty, to legalize the smuggled vehicles by 6th April by paying nominal duty. Similarly, textile units have availed the amnesty scheme and deposited over Rs 3 billion to the national kitty.
Similarly, the federal government has withdrawn tax exemptions extended to five influential sectors of the economy (FBR has imposed a 2% sales tax on textiles - including jute, carpets, leather, sports and surgical goods), besides increasing the sales tax rate on tea to 16%. The move is aimed at raising roughly Rs25 billion in additional taxes by June this year.
However, despite these measures, FBR is struggling to achieve the revenue collection target during the ongoing financial year 2012-2013. The FBR has twice revised the revenue collection target during the ongoing financial year 2012-2013 due to poor performance of the tax department. Earlier, FBR revised the budgetary revenue target to Rs2,231 billion from Rs2,381 billion for the current fiscal year, showing a shortfall of Rs150 billion. Later, FBR further revised the tax collection target to Rs.2126 billion during the ongoing fiscal year 2012-2013.
The FBR last week informed the Prime minister that finance ministry had set this year's tax target on unrealistic foundations, as ministry had expected the nominal GDP to remain around 16%. Contrary to this, the nominal GDP has so far been around 12% as both inflation and GDP growth targets have been revised downward. Therefore, FBR is struggling to achieve the target and need additional measures to reach the target.
Sources said that FBR is eyeing to introduce tax amnesty scheme to whiten the black money by paying nominal tax/duty through presidential ordinance, which former national assembly failed to opt it. The former government has planned to generate Rs 120 to Rs 150 billion through amnesty scheme and caretaker government might bring it through an ordinance to increase the revenue collection.