The Federal Board of Revenue (FBR) has managed to reach its four-month target of Rs 2.14 trillion despite poor performance in growing the tax base because of a 34% decrease in income tax returns filed but may have trouble maintaining the momentum moving forward.
Ishaq Dar, the finance minister, was forced to once again push out the deadline for filing returns due to the dismal results in growing 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.
According to FBR authorities, the FBR collected Rs2.148 trillion in taxes as opposed to the objective of Rs2.143 trillion for the period of July to October.
Tax revenue increased by 16%, or Rs305 billion, when compared to the same period in the previous fiscal year. This increase was slower than the current inflation rate of 23% but adequate to keep the tax division on schedule for the first quarter of the fiscal year.
The FBR collected Rs1.84 trillion in taxes in the first four months of the preceding fiscal year. However, it appears that the FBR may fall short of its tax goals for the upcoming months due to the crippling?economy.
As a result, to a decline in imports, the FBR was unable to meet its monthly tax target of Rs 534 billion, which it missed by Rs 22 billion.
Despite recording a 15% growth rate over the Rs445 billion collection in October of last year, the monthly goal was not met.
The Inland Revenue Service (IRS) exceeded its goal for the period of July to October, partially offsetting the negative effects of the Customs Department’s poor collection.
With fewer than 2.5 million people filing income tax returns, which represents a 34% decrease in the base compared to the prior fiscal year, the tax system has been unable to enlarge the tax base. As many as Rs3.8 million worth of returns had been submitted for tax year 2021.
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. Rather, 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 target.
The deadline for filing taxes was again extended by the finance minister on Monday, moving it to November 30. In an effort to considerably raise the number, Dar had last month announced a one-month extension of the legal deadline for filing income tax reports. Though, only 650,000 more returns were submitted in the previous month.