FBR asked to help resolve Centre-PRAs disputes

ISLAMABAD: Minister of State for Finance Dr Aisha Ghaus Pasha has directed the Federal Board of Revenue (FBR) to resolve the tax-related issues between the federation and the provincial revenue authorities including the collection of sales tax on toll manufacturing; transportation business and restaurants through mutual consensus.

Dr Pasha Wednesday obtained the first briefing from the FBR on revenue collection, strategy to meet targets, reforms in the tax administration, new initiatives and broadening of the tax base.

Sources told Business Recorder here on Wednesday that the Minister of State for Finance visited the FBR House and held a meeting with the FBR Chairman Asim Ahmed, and relevant FBR members. The meeting was attended by FBR Members of Inland Revenue (Policy) and Customs (Policy) and Members of Customs and Inland Revenue Operations.

The presentation on the revenue collection performance was given by the director general of the Directorate General of Revenue Analysis FBR to the Minister of State for Finance.

Dr Pasha celebrated the role of the National Tax Council (NTC) in resolving sales tax issues between the FBR and the provinces. The NTC had already directed the FBR to review the revised definitions of “Goods” and “Services” in line with the unanimous definitions agreed among provincial revenue authorities.

FBR tells Miftah: Over Rs300bn revenue measures may be required

The Minister of State for Finance was briefed in detail about the strategy to meet the revenue collection target for the current fiscal year.

The FBR has informed the minister that the FBR has collected net revenue of Rs4,858 billion during July, 2021-April, 2022 of the current Financial Year 2021-22, which has exceeded the target by Rs239 billion. This represents a growth of about 28.6 per cent over the collection of Rs3,778 billion during the same period, last year. The net collection for the month of April 2022 realized Rs480 billion representing an increase of 24.9 per cent over Rs384 billion collected in April 2021.

On the other hand, the gross collections increased from Rs3,981 billion during July 2020-April 2021 to Rs5,122 billion in the current Financial Year July 2021-April 2022, showing an increase of 28.7 per cent. Likewise, the amount of refunds disbursed during April 2022 was Rs34.6 billion while in April 2021 the refunds disbursed were Rs19.6 billion, registering an increase of 76.2 percent. Similarly, refunds worth Rs264 billion have been disbursed during July 2021-April 2022 compared to Rs203 billion paid last year, showing an increase of 30.1 per cent.

The FBR officials said that even though the FBR had agreed to a target of Rs6,100 billion with the IMF, the same was never made a target of the FBR. So now the FBR would need Rs484.5 billion per month to achieve the initial target of Rs5,829 billion and Rs621 billion each in May and June to achieve the revised target of Rs6,100 billion. The present government is fully determined to collect Rs6,100 billion in this fiscal year.

Sales tax on all POL products has been reduced to zero which cost the FBR Rs45 billion in April 2022.

Likewise, the revenue impact of sales tax exemptions provided to fertilizers, pesticides, tractors, vehicles, and oil and ghee come to Rs18 billion per month. Similarly, zero rating on pharmaceutical products has cost FBR Rs10 billion in sales tax during the month of April 2022. Thus, in aggregate, these relief measures have impacted revenue collection by approximately Rs73 billion during the month of April 2022. Furthermore, the political uncertainty and import compression also negatively impacted revenue collection during April.

The FBR has introduced a number of innovative interventions both at policy and operational levels with a view to maximize revenue potential through digitization, transparency, and taxpayers’ facilitation. This has not only resulted in ensuring the ease of doing business but also translated in a healthy and steady growth in revenue collection.

Copyright Business Recorder, 2022