Tax collection exceedingly exceeds target: revenue shows Rs 3.52 billion increase: CBR Chief

Surpassing the revenue collection target, the Central Board of Revenue (CBR) has amassed Rs 838.532 billion during July-June of fiscal 2006-07 against the target of Rs 835 billion, showing an increase of Rs 3.52 billion.
CBR Chairman M. Abdullah Yusuf told media persons on Sunday that the provisional revenue collection was Rs 838.532 billion during fiscal 2006-07 against Rs 713.444 billion in the corresponding period in FY06, showing a growth of 17.5 percent.
The break-up reveals that the direct taxes collection was Rs 327.60 billion in fiscal 2006-07 against Rs 224.98 billion in the same period in FY06, depicting a growth of 45.6 percent. The sales tax collection was Rs 309 billion during FY07 against Rs 295 billion in FY06, showing a growth of 4.7 percent.
The CBR would collect over Rs 1 billion more as sales tax in few days, which would help in meeting the sales tax target of Rs 311 billion in Fiscal 2006-07. So far, the sales tax collection was Rs 309 billion against the target of Rs 311 billion, showing a decrease of Rs 2 billion.
The GST collection at the import stage was Rs 177 billion in fiscal 2006-07 against Rs 171.45 billion in the same period in FY06, showing an increase of 2.8 percent. The sales tax collection on domestic consumption was Rs 132 billion against Rs 123 billion, reflecting an increase of 7.5 percent.
The board has collected Rs 70 billion as federal excise duty (FED) during fiscal 2006-07 against Rs 55 billion in the same period in FY06, reflecting a growth of 26.7 percent.
The collection of customs duty was Rs 132 billion during this period against Rs 138 billion, showing a decline of 4.5 percent. The CBR chief said the board has paid an amount of Rs 80 billion as refunds and rebates to the exporters during the period under review.
He said during fiscal 2006-07, the income tax refund was Rs 30 billion, sales tax refund Rs 37 billion, and customs duty rebate stood at Rs 13 billion. The rebate payment is about Rs 6 billion lower due to lesser imports and revision of duty drawback rates, he added.
Similarly, the refund payment of direct taxes has declined by Rs 4 billion, but sales tax refunds increased by Rs 5 billion in fiscal 2006-07. In June, the board has paid around Rs 1.7 billion refund to the exporters.
Explaining the tax-wise performance, Abdullah Yusuf said the direct taxes have maintained its marvellous growth throughout the year. The year-end overall growth has been over 45.6 percent. The collection so far has been Rs 327.6 billion, which is even higher against the upward revised target of Rs 318 billion.
He said the share of direct taxes has been sharply increased to 39 percent in fiscal 2006-07 against 30 percent in FY06. This is for the first time that the income and the corporate has become the leading tax which is due to two reasons.
First, since direct tax structure is progressive where the people with higher taxable income are being taxed at higher rates. Secondly, this change reflects the success of tax policy and administration reforms which are being vigorously pursued to improve taxation system in Pakistan, he added.
Abdullah Yusuf said all components of direct taxes have shown remarkable growth. Particularly, share of voluntary compliance has shown extraordinary improvement during fourth quarter (April-June) of fiscal 2006-07. The voluntary compliance included payment made along with the returns and advance tax payment made by the corporate sector.
Similarly, the share of withholding tax is also gradually declining from over 55 percent in FY06 to 45 percent in FY07. However, it has maintained a healthy growth of over 20 percent. The oil and gas, banking and telecom sectors have maintained a vibrant growth, which resulted in increase in overall direct taxes collection, he added.
About the sales tax performance, Abdullah Yusuf highlighted factors responsible for GST performance in fiscal 2006-07, saying the sales tax base has seriously been eroded due to decline in growth of imports.
He said the imports grew by over 30 percent in FY06. Even the growth in dutiable imports was close to 20 percent at that time. Keeping this in view, it was projected that imports and dutiable imports may grow by 15 percent in fiscal 2006-07. On the other hand, around 9 percent growth in total imports and a decline in dutiable imports by 4 percent was recorded in fiscal 2006-07. Therefore, the board has witnessed a modest growth in sales tax imports and decline in customs duty collection, he added.
The CBR chief said the sales tax on domestic consumption has been affected by extra payment of refunds to power and textile sectors in fiscal 2006-07.
The FED collection maintained a healthy growth of over 26.7 percent, showing that the domestic demand remains strong. The share of FED in overall collection remained 8.3 percent.
He said the government has fixed an ambitious revenue collection target of Rs 1.025 trillion for fiscal 2007-08. If the existing pace of economic growth is being maintained in the new fiscal year, the board would be able to meet the target of Rs 1.025 trillion for fiscal 2007-08.
Abdullah Yusuf said the target of customs duty for fiscal 2007-08 would be revised keeping in view the withdrawal of one-percent special surcharge on the import of goods.