ISLAMABAD: Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial has disclosed that the FBR has suffered a shortfall of Rs384 billion during first six months (July-December) 2024-25 due to slowdown of autonomous growth in revenue collection anticipated at the time of budget (2024-25).
The FBR chairman informed the Senate Standing Committee of Finance that the assessment of revenue collection pattern revealed that factors responsible for revenue shortfall during this period included exchange rate stability, lower than expected inflation, slow recovery of large-scale manufacturing sector and less than expected low GDP growth rate.
He said that this trend is likely to continue in January and February 2025, however, the growth will pick up in the last four months of the current fiscal year and hence there will be no further loss in revenue collection on account of autonomous growth during March-June (2024-25).
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“Total loss in autonomous growth by February 2025 is projected at Rs447 billion”, the FBR chairman projected.
The policy measures adopted in Finance Act 2024 of Rs1.3 trillion are also showing less than expected collection due to behavioural changes such as real estate and traders and estimated errors.
In the first six months of 2024-25, the loss on account of policy measures has been calculated at Rs251 billion which is expected to go to a figure of Rs539 billion unless corrective measures are taken, the FBR chairman said.
The number of retailers increased from 0.2 million last year to 0.6 million this year. The tax paid with the income tax return filers has also increased upto Rs105 billion during this year.
During the meeting, the committee was briefed on Pakistan’s current revenue shortfall of Rs384 billion for the first half of the fiscal year. The FBR collected Rs5,624 billion in taxes, falling short of the targeted Rs6,008 billion. The tax-to-GDP ratio has risen to 10.8 per cent in the second quarter of 2024-25, up from 9.5 per cent in the first quarter, although it remains below the IMF-agreed target of 13.6 per cent by the end of the programme. By comparison, India’s tax-to-GDP ratio stands at 18 per cent.
If you want to judge the efforts of the FBR to increase revenue, it is reflected from increase in tax-to-GDP ratio, the FBR chairman said. Senator Mandviwalla expressed concerns over FBR’s handling of sales tax collection, stating, “Many times, we have asked the FBR to collect sales tax on goods, but the people of FBR opposed it.”
Copyright Business Recorder, 2025
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