ISLAMABAD: Revenue collection in August fell two per cent or Rs5 billion year-on-year to Rs294bn, data released by the Federal Board of Revenue (FBR) showed on Monday.
The FBR also missed the month’s collections target by 4.5pc or Rs14bn.
The board had projected revenue collection of Rs308bn for August.
The heavy rainfall badly affected customs clearance of imported cargo during the last week of August leading to lower collection of duty and taxes at import stage.
The payment of Rs31bn refunds in the first two months, an increase of 181pc over last year’s payment of Rs11bn, showed a sharp acceleration in economic activity, leading to revival of industrial production in the post-Covid period.
Monthly target missed by Rs14bn
Meanwhile, cumulative revenue collection in July-August reached to Rs594bn, up 2pc from last year. Meanwhile, revenue collections in July and August were 7pc higher than the FBR’s target of Rs551bn.
The government, while preparing the budget for the ongoing fiscal year, had assured the International Monetary Fund (IMF) to raise Rs4.963 trillion in FY21 against Rs3.989tr collected in FY20 — a projected increase of 24.4pc.
However, the Finance Act lacks any plan on how the government aims to raise the additional revenue of Rs974bn to meet the IMF target.
Meanwhile, FBR’s new management had increased collection target for August by Rs9bn at Rs308bn. However, Ministry of Finance took strong notice of low targets and advised the FBR to increase monthly collections so that the annual target could be achieved.
As per the agreed revenue plan with the IMF, revenue collection target for the August should have been set at around Rs370bn.
It is believed that the FBR is using new tactics by keeping revenue collection targets low in the first quarter to hide its inefficiencies and blame it on Covid-19-led slowdown.
Income tax collection during the month stood at Rs94bn as against Rs90bn in the same month last year, witnessing an increase of 4pc.
Meanwhile, sales tax collection during the month reached Rs151bn against last year’s Rs142bn, showing a growth of 7pc. The projected target for sales tax was Rs140bn — lower than last year’s collections during the same month. The impressive sales tax collections came as a result of rise in POL prices during the month of August.
The federal excise duty (FED) collection reached Rs20bn as against Rs17bn last year, showing an increase of 16pc. The FED target for the month was set at Rs19bn.
Moreover, customs collection in the month reached Rs44bn as against Rs53bn collected over the corresponding month last year, showing a decline of 18pc. The government had projected a revenue target of Rs44bn for the month under review.
According to FBR officials, following the slowdown in Covid-19 infections, the economic activity in the country is now being revived through multiple economic stimuli and relief measures. Moreover, the record rainfalls also affected custom collections during the last week of August.
Meanwhile, sales tax collection at import stage was also low as compared to the corresponding period of last year owing to heavy rainfall in Karachi. Besides, exemption granted with respect to the additional customs duty on more than 1,600 tariff lines in the budget also decreased collection in comparison to the previous financial year.
An official FBR statement said the Pakistan Customs has initiated massive anti-smuggling operations throughout the country.
During August, Pakistan Customs seized smuggled goods worth Rs3.95bn including fabrics, cigarettes, foreign currency, POL products, auto parts, foodstuff, narcotics and other miscellaneous goods.
Moreover, the FBR also reported mega seizures of luxury vehicles, gold, and betel nuts during the same period. Customs formations at Quetta, Peshawar and Multan have seized smuggled goods worth Rs1.6bn, while most of the remaining goods were seized in Karachi, Lahore and Islamabad from raids on go downs.
