Tag: tax collection

  • FBR surpasses May revenue target with Rs760 billion collection

    FBR surpasses May revenue target with Rs760 billion collection

    The Federal Board of Revenue (FBR) has exceeded its revenue target for May in the fiscal year 2023-24 by collecting Rs760 billion in tax revenues, surpassing the target of Rs745 billion.

    This achievement, announced in a statement by the FBR today, signifies a remarkable 33 per cent growth compared to May 2023.

    In addition to the overall revenue increase, domestic taxes also experienced a significant 33 per cent growth during May.

    “The FBR is poised to achieve the assigned target for the final month of the current financial year, June 2024,” the statement added.

    This positive trend has contributed to an overall revenue growth of 31 per cent for the first eleven months of the current fiscal year, compared to the same period last year.

  • Pakistan gears up for crucial IMF talks on $3 billion SBA programme

    Pakistan gears up for crucial IMF talks on $3 billion SBA programme

    Pakistan is set to commence vital discussions with the International Monetary Fund (IMF) concerning the completion of the second review under the $3 billion Standby Arrangement (SBA) programme.

    The formal invitation to the Washington-based lender is expected to be dispatched shortly after the formation and oath-taking of the federal cabinet, with negotiations anticipated to commence in the coming week.

    Simultaneously, Pakistan plans to request a new deal under the 36-month Extended Fund Facility (EFF).

    Sources have indicated that the size of the upcoming EFF programme is yet to be finalized, but Islamabad aims to explore the inclusion of climate finance to potentially increase the programme’s magnitude from $6 billion to $8 billion.

    A significant challenge facing the incoming finance minister is the pursuit of the Federal Board of Revenue’s (FBR) tax collection target of Rs890 billion for March 2024. Failure to meet this quarterly (Jan-March) target with the IMF may prompt additional taxation measures for the remaining fiscal year.

    Prime Minister Shehbaz Sharif chaired a high-level meeting on Tuesday to receive a comprehensive briefing from the FBR team on the future strategy for revamping the taxation system.

    The FBR has, to date, collected Rs5.82 trillion in the first eight months of the current fiscal year, experiencing a shortfall of Rs33 billion in achieving the February 2024 monthly target.

    To meet the targeted Rs9.415 trillion by June 30, 2024, the FBR must collect Rs3.58 trillion in the remaining four months (March-June) period.

    March 2024 holds particular significance, with the monthly target of Rs890 billion crucial for fulfilling the agreed third-quarter (Jan-March) period with the IMF.

    PM Shehbaz emphasized the immediate commencement of automation and digitization of the FBR, personally committing to monitor the entire process.

    According to The News, he urged the adoption of international best practices to enhance transparency, increase tax collection, and eradicate tax evasion, corruption, and smuggling.

    Expressing dissatisfaction with the current progress, PM Shehbaz directed the FBR to start the automation and digitization process immediately, urging the acquisition of services from international firms. He stressed the appointment of officers based on merit in the Track and Trace system.

    During the meeting, FBR Chairman Malik Amjad Tiwana briefed the prime minister on measures taken towards automation, tax net expansion, refund payments to exporters, and anti-smuggling efforts.

    PM Shehbaz, however, insisted on immediate progress, highlighting the collaboration with the Ministry of Interior and the Pakistan Army to combat smuggling effectively.

    As the meeting concluded, PM Shehbaz praised the efforts of caretaker finance minister Dr. Shamshad Akhtar and her team, commending their adherence to the policies laid by the previous government to avert default.

    The prime minister expressed confidence in achieving progress and prosperity through diligent efforts and adherence to the right direction.

    The meeting, attended by key officials, emphasized the urgency of digitalized invoicing and the inclusion of 1.5 million more individuals into the tax net, underlining the government’s commitment to fostering economic stability and growth.

  • FBR exceeds revenue target by Rs63 billion for first three months of current fiscal year 

    FBR exceeds revenue target by Rs63 billion for first three months of current fiscal year 

    In the initial quarter of the ongoing fiscal year, the Federal Board of Revenue (FBR) successfully amassed a total of Rs2,041 billion, significantly surpassing the stipulated target of Rs1,978 billion by an impressive margin of Rs63 billion. 

    Furthermore, the FBR exhibited commendable dedication and diligence in pursuit of its revenue goals for the month of September 2023. Despite setting a target of Rs794 billion, the FBR managed to accumulate a noteworthy sum of Rs834 billion, as opposed to the Rs688 billion collected during the corresponding period in 2022. 

    Additionally, the FBR issued refunds totaling Rs37 billion, a notable increase compared to the Rs18 billion issued in September 2022. 

    Nonetheless, it is important to note a considerable reduction in import activities during September 2023, with taxes collected at the import stage amounting to Rs254 billion, down from the previous month’s figure of Rs299 billion. According to ARY News, this deficit of Rs45 billion was effectively compensated for through the collection of domestic taxes, particularly direct taxes. 

  • New tax to be imposed on citizens soon

    New tax to be imposed on citizens soon

    The local government has unveiled a new tax that has drawn mixed reactions from citizens. 

    This latest tax, to be imposed in lieu of garbage collection, will be collected from households, shops, petrol pumps, and industrial units on a monthly basis.

    Starting from October, Multan and its neighboring areas will see this sanitation tax in effect. The tax rates are set at Rs50 for houses, Rs200 for shops, Rs1,000 for petrol pumps, and Rs2,000 for industrial unit owners on a monthly basis. 

    The government anticipates an annual revenue boost of approximately Rs4.28 billion through this tax initiative. However, the move has not been met with unanimous approval among citizens, many of whom have criticised it. 

    Meanwhile, amid ongoing discussions concerning the surging costs of electricity production in Pakistan, the Kot Addu Power Company has submitted an application to the National Electric Power Regulatory Authority (Nepra), seeking approval for what could potentially become the country’s most expensive electricity generation tariff.

    The proposal suggests an electricity tariff of Rs77.31 per unit, a significant increase from the current rate of twenty-eight rupees per unit. The power company attributes this substantial hike to rising production costs.

    Notably, the Kot Addu Power Company recently secured a sixteen-month extension during the Pakistan Tehreek-e-Insaf (PTI) administration. However, this extension has not escaped controversy, as the Senate Power Committee has declared it illegal, further fueling the debate over electricity tariffs in the country.

  • IMF demands detailed electricity bill relief plan from Pakistan amid nationwide unrest

    IMF demands detailed electricity bill relief plan from Pakistan amid nationwide unrest

    The International Monetary Fund (IMF) has asked Pakistan to provide a written plan for relief in electricity bills amidst ongoing nationwide protests. 

    The caretaker government’s decision to seek approval from the IMF before announcing any consumer relief led to a federal cabinet meeting on Tuesday, chaired by interim Prime Minister Anwaarul Haq Kakar. 

    Despite discussing options, the meeting concluded without unveiling any measures. The Power Division had shared proposals with authorities, but the strict conditions of the IMF loan necessitated involving the lender first. 

    Pakistan’s $3 billion loan agreement with the IMF in July involved adhering to stringent financial discipline. The current surge in electricity rates, approved by the previous government, is reflected in bills. 

    According to Geo, Finance Minister Shamshad Akhtar held a virtual meeting with IMF representative Esther Perez, discussing relief measures and the ongoing protests. While the Pakistani team submitted various relief proposals, the IMF officials requested a written plan, expected to be shared soon. 

    Additionally, the Federal Board of Revenue (FBR) engaged with the IMF on tax collection in July, with plans for further discussions in the coming days. 

  • FBR misses July 2023 revenue target by Rs2 billion, collecting Rs532 billion in taxes

    FBR misses July 2023 revenue target by Rs2 billion, collecting Rs532 billion in taxes

    The Federal Board of Revenue (FBR) has announced that the tax revenues collected for the month of July 2023 amounted to Rs532 billion, slightly falling short by Rs2 billion of the target set for this period.

    This figure reflects a noteworthy increase of 15 per cent year-on-year, compared to the Rs462 billion collected in July 2022.

    However, when examining the data on a monthly basis, there was a significant decline of 43.52 per cent as the tax revenue for July 2023 dropped compared to the Rs942 billion collected in the previous month.

    Looking ahead, the government has set a revenue collection target of Rs9.415 trillion for the fiscal year 2023-2024.

     It is worth recalling that in the previous fiscal year 2022-2023, the FBR failed to meet its annual budgetary collection target by approximately Rs522 billion, as it collected Rs7.118 trillion by June 27, 2023, in contrast to the projected amount of Rs7.64 trillion for the entire fiscal year.

  • FBR faces Rs75 billion shortfall in annual tax collection target

    FBR faces Rs75 billion shortfall in annual tax collection target

    The Federal Board of Revenue (FBR) is currently confronted with a shortfall of Rs75 billion in attaining the revised annual tax collection target of Rs7,200 billion for the fiscal year.

    Despite collecting Rs7,125 billion, which falls short of the revised target, the FBR faces a net revenue shortfall of Rs75 billion for the fiscal year 2022-2023.

    Originally, the FBR’s annual tax collection target was established at Rs7,640 billion for the outgoing fiscal year, subsequent to the unveiling of the mini-budget in February 2023.

    To generate additional revenue, the government implemented various measures, including an increase in the Goods and Services Tax (GST) rate from 17 per cent to 18 per cent, the application of a higher GST rate of 25 per cent on luxury goods, and a 154 per cent rise in the Federal Excise Duty (FED) on cigarettes.

    However, over the past four months, the FBR failed to generate the anticipated additional revenue, leading to a downward revision of the revenue collection target from Rs7,640 billion to Rs7,200 billion by the end of June 2023.

    Notably, Minister for Finance and Revenues, Ishaq Dar, took to Twitter to highlight the achievement of the highest-ever tax collection for the outgoing fiscal year.

    He stated, FBR has collected Rs7,000 billion in taxes for the first time in the country’s history as of June 26, 2023, and expressed optimism that the revenue collection would further increase by June 30, 2023.

    It is expected that the FBR will issue a formal statement regarding the revenue collection in due course.

  • Govt increases excise duty on registration of cars over 2000cc

    Govt increases excise duty on registration of cars over 2000cc

    The federal government has implemented a considerable increase in excise duty on vehicle registration for vehicles with engine capacities exceeding 2000cc in the Finance Bill for the fiscal year 2023-2024.

    Under the new regulations, a fixed tax rate of six per cent has been imposed on vehicles ranging from 2001cc to 2500cc. Individuals who file their taxes will be subject to a tax payment of Rs0.25 million for vehicles falling within this range.

    For vehicles with engine capacities between 2501cc and 3000cc, the government has introduced an eight per cent fixed tax rate. Previously, filers were required to pay Rs0.2 million, while non-filers were subjected to a higher tax amount of Rs 0.4 million. Furthermore, a substantial ten per cent fixed tax has been imposed on the registration of vehicles with a capacity of 3000cc.

    The National Assembly has already approved the Finance Bill for the upcoming fiscal year, incorporating vital budgetary proposals. Finance Minister Ishaq Dar presented the bill to the House, outlining a total outlay of Rs14,480 billion.

    The passage of the federal budget in the House was a crucial step taken to address the concerns of the International Monetary Fund (IMF) and secure the revival of a suspended loan program. In light of these developments, revisions were made to the tax collection target, raising it from Rs9,200 billion to Rs9,415 billion.

    To accommodate increased pension payments, an allocation of Rs801 billion has been designated, reflecting a significant rise from the previously allocated amount of Rs761 billion. These measures demonstrate the government’s commitment to addressing pressing fiscal matters and ensuring financial stability.

  • Ishaq Dar to present Rs14.7 trillion budget for FY2023-24 today

    Ishaq Dar to present Rs14.7 trillion budget for FY2023-24 today

    Finance Minister Ishaq Dar is set to reveal the federal budget for the fiscal year 2023-24 today, with a proposed outlay of Rs14.7 trillion. The budget carries a higher consolidated budget deficit, exceeding 6 per cent of the GDP, and includes allocations for various targeted schemes aimed at attracting voters in the upcoming general elections.

    The government has established targets for tax collection by the Federal Board of Revenue (FBR) at Rs9.2 trillion, along with a non-tax revenue target of Rs2.7 trillion. To achieve the non-tax revenue target, the government plans to amend the finance bill, raising the petroleum development levy (PDL) from Rs50 per litre to Rs55-60 per litre. This adjustment aims to collect Rs870 billion in the next budget, as opposed to the revised estimate of Rs550 billion for the outgoing fiscal year.

    The credibility of the budgetary figures remains a concern as they are subject to change throughout the financial year. If a new government assumes power after the general elections, it will likely need to introduce a mini-budget to align economic realities with the International Monetary Fund (IMF) and secure a fresh bailout package.

    The government’s ability to satisfy the IMF on the revival of the stalled programme is yet to be seen. The continuing stalemate may endanger the diminishing foreign exchange reserves, with the State Bank of Pakistan’s reserves falling below $3.9 billion.

    Without establishing a comprehensive budgetary framework with the IMF, signing the staff-level agreement will be impossible. Fulfilling three conditions becomes crucial: securing external financing of $6 billion, presenting the next budget in accordance with IMF guidelines, and ensuring a market-based exchange rate.

    The IMF programme is scheduled to conclude on June 30, making any further extension unlikely, as stated by the finance minister during the launch of the Economic Survey for 2022-23. The need for a realistic budget for the next financial year is evident due to the lack of credibility surrounding the budgetary figures, which frequently undergo changes.

    The tenure of the Pakistan Democratic Movement (PDM)-led government is set to expire on August 12. However, the government has approved an allocation of Rs90 billion for the implementation of the SDGs Achievement Programme (SAP) in the next budget, compared to the revised allocation of Rs116 billion for the current financial year.

    Ensuring external debt servicing, which requires $25 billion, is the primary priority of the government in the next budget. How the government plans to generate such a substantial amount, considering it obtained just under $8.1 billion in the first ten months of the current fiscal year out of the total budgeted figure of $22.8 billion for external loans and grants, remains to be seen.

    The fiscal constraints present significant challenges, as the total net revenue receipts of the federal government are insufficient to meet debt servicing requirements. After transferring resources to provinces and accounting for non-tax revenue, the total net receipts of the federal government are expected to amount to Rs6.5 trillion.

    Meanwhile, total debt servicing will consume Rs7.5 trillion, resulting in a deficit of Rs1,000 billion for the federal government. Therefore, other expenditure categories, such as defense, salaries, pensions, civil government operations, subsidies, and grants to public sector enterprises, will have to be funded through borrowing.

    During the survey launch, the finance minister pledged the government’s commitment to increase salaries, pensions, and minimum wages for workers in the FY24 budget. To finance the substantial budget deficit in the next financial year, Pakistan will need to acquire domestic and foreign loans amounting to Rs7,000 to Rs7,500 billion.

    The challenges ahead do not have easy solutions, and addressing them will require profound structural reforms to navigate the economy out of its crisis mode.

  • FBR surpasses revenue collection target by Rs15 billion for July

    FBR surpasses revenue collection target by Rs15 billion for July

    The Federal Board of Revenue (FBR) revealed the provisional revenue collection data for July 2022, which came to Rs458 billion.

    The FBR generated net revenues of Rs458 billion in July, which was Rs15 billion more than its goal of Rs443 billion.

    These collections—which represent an increase of roughly 10 per cent over the Rs417 billion collected during the same time last year—are the biggest ever for the month of July.

    The gross revenue increased from Rs438 billion in July of the previous year to Rs486 billion, a rise of 11 per cent. Similarly, the amount of refunds given out in July increased by 32 per cent to Rs28 billion from Rs21 billion paid in the previous year.

    Domestic taxes made up 55 per cent of the total collection while import taxes kept their 40 per cent share.

    Previously, 52–53 per cent of the total revenue was collected via taxes at the import stage. Similarly, the increase in domestic income tax is close to 31 per cent, which the FBR described as a dramatic move toward direct taxation.

    The Advance Tax collected in July has increased significantly. Due to the implementation of a withholding provision that is applicable regardless of the holding term, there is also a 118 per cent rise in the advance tax on the sale of properties under Section 236-C.

    Similarly, a change in the tax rate has led to a 40 per cent increase in Advance Tax under Section 147, particularly from financial companies.

    Raising the FED rate on tobacco and cigarettes has also paid off. Sales tax from the tobacco sector increased by a record-breaking 67 per cent, while the FED from tobacco saw a record-high growth of over 47 per cent, or Rs2.6 billion.

    Additionally, the FED for international flight travel has climbed by more than 200 per cent. Additionally, Pakistan Customs saw a modest 2.58 per cent increase in revenue under the heading of customs duty during July 2022 compared to Rs65 billion collected during the same time last year.

    However, it fell short of the Rs77 billion target set for July as a result of the government’s import compression policy, which aims to limit the outflow of US dollars.

    In addition, the FBR lost around Rs11 billion in sales tax due to the zero-rating of petroleum goods.

    It is important to note that the number of income tax returns for the tax year 2021 has increased by 13 per cent to 3.4 million from 3.0 million for the tax year 2020.