The Federal Board of Revenue (FBR) has managed to reach its four-month target of Rs2.14 trillion despite poor performance in increasing the tax base because of a 34 per cent decrease in income tax returns filed.
Ishaq Dar, the finance minister, was forced to once again push the deadline for filing returns due to the dismal results in increasing the tax base. The new deadline is November 30; within this time, FBR must receive an additional Rs1.3 million in returns only to match the amount from the previous year.
The FBR collected Rs2.148 trillion in taxes, as opposed to the objective of Rs2.143 trillion set for the period of July to October, according to FBR officials. Tax revenue increased by 16 per cent, or Rs305 billion, as compared to the same period in the previous fiscal year.
This increase was slower than the 23 per cent inflation rate that was in effect at the time. but adequate for the first four months of the fiscal year to keep the tax department on pace.
According to Express Tribune, the FBR had taken in Rs1.84 trillion in tax revenue during the first four months of the previous fiscal year. The economy’s slowdown, however, makes it appear as though the FBR may fall short of its tax goals for the upcoming months.
A decrease in imports was the main reason the FBR could not meet its monthly tax goal of Rs 534 billion, which it missed by Rs 22 billion. Although there was a 15 per cent increase in revenue over the Rs445 billion collected in October of last year, the monthly goal was not met.
The Inland Revenue Service (IRS) exceeded its July–October goal, largely mitigating the effects of the Customs Department’s low collection rate.
As long as less than 2.5 million people file income tax returns, the tax system will not be able to increase the tax base, which has shrunk by 34 per cent during the previous tax year. Up to Rs3.8 million worth of returns have been submitted for the 2021 tax year.
By extending the tax base to include traders, Pakistan had promised the International Monetary Fund (IMF) that it would increase the tax base by a minimum of 700,000. Instead, it is approximately Rs1.3 million below the total from the prior year. The FBR’s base really falls two million short of its own conservative goal.
