Amir Khan

Pakistan faced a substantial deficit of approximately Rs9 billion in tax collection in January, attributed mainly to lower collection in domestic taxes and customs duties, reports WealthPK. The provisional data indicates that the tax collected during the month amounted to Rs681 billion, falling short of the targeted Rs689.6 billion. This setback is notable despite a commendable increase of 24.95% compared to the Rs545 billion recorded in the same month last year. Talking to WealthPK on the condition of anonymity, a senior tax official at the Federal Board of Revenue (FBR) said in the broader context of the Fiscal Year 2023-24, the collection during the first seven months (July-January) surpassed expectations, reaching Rs5.150 trillion, exceeding the targeted Rs5.115 trillion by Rs35 billion. Notably, the January shortfall was compensated by higher collections in December 2023.

Looking ahead, the government has set an ambitious revenue collection target of Rs9.415 trillion for the entire Fiscal Year 2023-24, compared to the revised collection of Rs7.2 trillion in the previous fiscal year, signifying an increase of Rs2.219 trillion or 30%. "The positive performance in revenue collection is primarily driven by a remarkable growth in income tax collection, closely followed by a vigorous growth in domestic sales tax," he emphasised. The government's optimism in achieving the set tax target is grounded in the projected economic growth of 3.5% and an average annual inflation rate of 21%. The autonomous growth in revenue, resulting from GDP growth and inflation, is projected at Rs1.76 trillion in 2023-24. Talking to WealthPK, Member Administration at the FBR Shad Masood said that challenges persist, especially in the import stage, where revenue collection has yet to gain momentum due to a slowdown in imports.

Exporters estimate that the FBR has withheld approximately Rs700 billion in refunds up to January 2024. Despite this, the exporters did not provide specific details of the breakup of the total withheld refunds. In response to these challenges, Mr. Shad highlighted, "The government has finalized a digital-based system to broaden the country's narrow tax base. This comprehensive scheme will be implemented in phases to bring potential taxpayers into the tax net, including professional service providers such as lawyers, doctors, engineers, and others." Currently, Pakistan has a mere 2.3 million taxpayers, with corporate tax filers constituting 0.8% of commercial and industrial electricity users, and GST-registered entities making up just 13% of the total 1.4 million taxpayers, he said. Given the economic growth projections and strategic measures, the government must aim to enhance revenue collection and ensure sustainable fiscal growth in the coming months, he added.

Credit: INP-WealthPk