ISLAMABAD: The Federal Board of Revenue (FBR) witnessed a shortfall of Rs29 billion in April 2014 as an amount of Rs167bn was collected against a target of Rs196.4bn.
It was the highest-ever decline in a single month of the current fiscal year, which could be a major setback to PML-N government. The shortfall is the outcome of poor governance and compliance issues in the tax administration.
As compared to previous year’s collection of Rs152.480bn in April 2013, a meager growth of 8.69 per cent (Rs14.52bn) was witnessed this year, which is far less than the projected target.
As a result of shortfall recorded in the previous three quarters by the end of March 2014, revenue collection target was lowered to Rs2,345bn from the budgetary projected target of Rs2,475bn, a straight shortfall of Rs130 billion.
The revenue collection in the first 10 months (July-April) reached Rs1743bn as against Rs1609bn collected over the corresponding months of last year, an increase of Rs134bn.
The revenue collection projections for the fourth quarter (April-June) were made by the International Monetary Fund (IMF) during its last review of the Pakistan’s economy in Dubai.
Pakistan’s top economic team is currently in Dubai as part of the third IMF review under the extended fund facility for $6.64bn which will continue until May 10. “This meeting will set the tone of revenue collection in the next two months—May and June,“ a tax official told Dawn.
During the review, four options will be considered: new taxation measures equal to shortfall in revenue, withdrawal of tax exemptions, revenue receipts from the auction of 3G/4G or the most likely cut in the development expenditure. The projected budget deficit for the current fiscal year is 6.3pc.
The government is expected to receive $800m or 75pc of the total auction amount of $1.112bn for the auction of 3G/4G spectrum before the end of the current fiscal year.
The proceeds from the auction, which was non-tax revenue, was also short of the target because Finance Minister Ishaq Dar projected an amount of Rs120bn in the budget for the year 2013-14.
But FBR is eying to get approximately Rs10bn from the total auction proceeds. Section 236A of the income tax ordinance allows deduction of 10pc withholding tax of the total auction proceeds from the buyer. But the tax official said this tax is adjustable and will be treated as advance tax at the end of the fiscal year. The Large Taxpayers Unit Islamabad will collect tax from four winner cellular companies.
For May 2014, growth in revenue collection was projected at 26.7pc as revenue target was fixed at Rs219.5bn this year as against Rs173.3bn collected over the corresponding month of last year.
The Fund believed miracles in June 2014 as it projected a growth of 34.2pc for the month’s collection at Rs359.1bn this year as against Rs267.6bn over the corresponding month of last year.
In the fourth quarter (April-June), tax officials believed that revenue collection will witness a shortfall in the range of Rs70bn to Rs80bn.