The Federal Board of Revenue is planning to propose taxation measures and administrative/enforcement actions to the tune of Rs 419 billion in budget (2013-14) through withdrawal of tax exemptions and administrative measures to improve recovery from registered persons. Sources told Business Recorder here on Tuesday that the budget makers are working on tax policy/administration measures of Rs 419 billion for next fiscal year against taxation/enforcement measures of Rs 128 billion taken in budget 2012-13.
Of Rs 128 billion, Rs 31.772 billion were estimated through additional revenue measures in all major taxes while the remaining Rs 97 billion were estimated to be generated through improved administration and enforcement in the tax collection machinery.
Sources said that the FBR has estimated Rs 2,347 billion revenue projection for the next fiscal year (2013-14). The projection is based on 14 percent nominal Gross Domestic Product (GDP) growth rate estimated by the Finance Division. However, number of tax policy/administration measures to the tune of Rs 419 billion has been proposed to be adopted during 2013-14. If the proposed tax policy/administrative measures are approved by the government then the tax projections would be Rs 2,766 billion, ie, 10.4 percent of the GDP, sources said.
The total tax exemptions and concessions to various sectors and investors have cost the government Rs 185.496 billion during 2011-12 against Rs 175.211 billion in 2010-11, reflecting an increase of Rs 10.285 billion. The FBR is also finalisation new measures for meeting the revenue shortfall during the last quarter of 2012-13. These measures would be enforced through issuance of the statutory regulatory orders (SROs).
According to sources, the net revenue effect of the taxation and relief measures taken in last budget was over Rs 31.772 billion during 2012-2013. In last budget, the FBR had provided relief of Rs 1.228 billion through tariff rationalisation and relief provided to business and trade. On the customs side, no rate of duty was enhanced, but duties were brought down to provide relief to the general masses. Sales tax and federal excise measures had provided relief of Rs 5.50 billion. Sales tax and excise measures were estimated to generate Rs 29 billion. The net revenue impact of sales tax and federal excise was Rs 23.50 billion. The income tax measures have provided relief of Rs 24.5 billion to the business community and general masses. The income tax measures of Rs 34 billion were taken to generate additional revenue during 2012-13. The total taxation measures were estimated to generate revenue of Rs 63 billion and relief measures totalled at Rs 31.220 billion, reflecting a net effect of Rs 31.772 billion in 2012-13.
Sources added that the federal government had fixed Rs 2,381 billion revenue collection target (2012-13) for the FBR at the time of announcement of budget 2012-13. The revenue target which was set at Rs 2,381 billion for the current financial year was revised to Rs 2,126 billion.
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