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Net provisional tax collection up by 16%
Federal Board of Revenue (FBR)’s net provisional tax collection has increased by 16.1 percent during the first ten months of the fiscal year 2022-23 to Rs 5637.9 billion against Rs 4,855.8 billion same period last year. According to the Economic Survey 2022-23 launched here on Thursday, the domestic component of tax revenue collected by the […]
Federal Board of Revenue (FBR)’s net provisional tax collection has increased by 16.1 percent during the first ten months of the fiscal year 2022-23 to Rs 5637.9 billion against Rs 4,855.8 billion same period last year. According to the Economic Survey 2022-23 launched here on Thursday, the domestic component of tax revenue collected by the FBR increased by 20.2 percent and stood at Rs 4,886.1 billion in the first ten months of the current fiscal year as compared to Rs 4,064.0 billion last year. The net collection of direct tax has registered a growth of 44.2 percent from Rs 1,743.7 billion to Rs 2,514.9 billion during July-April FY2023. The bulk of the tax revenues of direct taxes is realized from income tax. The major contributions of income tax have come from contracts, imports, and profit payout. The tax payments with tax declaration and collection on demand have also shown high growth, it added. The gross and net sales tax collection during the period under review has Rs 2327.5 billion and Rs 2090 billion showing growths of around 1.7 percent and 1.2 percent, respectively.
Around 64 percent of total sales tax was contributed by sales tax on imports during the same period, while the rest was contributed by the domestic sector. According to the Economic Survey, the collection of Federal Excise Duty (FED) during the ten months of FY2023 has recorded a growth of 9.8 to Rs 281.2 billion from Rs 256 billion. The major revenue spinners of FED are cigarettes, cement, beverages/food, motor cars, air travel, etc. Customs duty has registered negative growth of 5.0 percent during July-April FY2023. The net collection has declined from Rs 791.8 billion to Rs 751.9 billion during July-April FY2023, owing to the import compression policy for fiscal stabilization. The major revenue spinners of customs duty have been mineral fuels, vehicles, edible oil, and machinery. The FBR is committed to achieving its assigned tax revenue target during FY 2023. As part of the 9th Review under the Extended Fund Facility Program of the IMF, new revenue measures of Rs 170 billion were taken through Finance Supplementary Act, 2023 which came into force on February 23, 2023.
However, the risks/challenges to FBR’s revenue outlook are unprecedented import compression, a slowdown in economic activity, and litigation of important revenue measures in the High Courts and the Supreme Court. The revenue mix of the FBR comprises 49 percent of the revenue coming from the import of goods. The import compression since the beginning of FY2023, which is more aggravated in the third quarter and fourth quarter of FY 2023 is hurting the revenue stream. The super tax that was imposed in FY 2023 on high-earning persons has been challenged in the High Courts of Sindh, Punjab, and Islamabad. The decision of the Sindh High Court is pending in appeal before the Honorable Supreme Court of Pakistan and the High Courts of Punjab and Islamabad have yet to decide the issue. As interim relief to FBR, the Honorable Supreme Court has allowed 50 percent of the recovery of Super Tax, it added.
