The government has reportedly communicated the Federal Board of Revenue (FBR) not to propose any new revenue generation measure for federal budget 2018-19; it was learnt. As 2018 is elections year, the government is keen to incentivize the public through federal budget for the tax year of 2018-19, resulting the FBR is said not to propose any new revenue generation measure, sources said.
"This was reflected in recent pre-budget chief commissioners' meeting at Islamabad where no proposal related to new revenue generation measure was discussed," they added. Moreover, sources said that chief commissioners during the meeting were asked only to identify flaws in existing tax procedures to plug revenue leakages instead of discussing new tax measures.
Replying to a question, sources said that although the board has made downward revision in its annual revenue budgetary target to Rs 3950 from Rs4013 billion, the revised target was also a formidable task to achieve. On one hand, the government has announced to enhance minimum income tax limit from Rs 0.4 million to Rs1.2 million from next financial year that will exclude around 0.5 million taxpayers from the FBR ambit with a negative impact of some Rs65 billion on revenue collection.
On the other hand, the authorities are going to fix unrealistic revenue target of around Rs4500 billion for the next fiscal year with no new tax measures, sources said; adding that the FBR would not only miss the current year revenue target but next year target as well.
Answer to another question, sources said that they had identified several procedural lapses, restraining the FBR to collect revenue. For instance, the gas distribution companies are charging sales tax on the previously issued a notification of Ogra dated August 31, 2015. As a result, the CNG stations are collecting sales tax on maximum CNG sales price at Rs 79 per kg from the end consumers where as the government is getting sales tax from the gas distribution companies on maximum retail price at Rs 67.50, incurring a loss of sales tax revenue of Rs 1.67 per kg.
This loss of sales tax revenue of Rs 1.67 per kg is being collected from end consumers and pocketed by CNG stations and the monthly loss to the government revenue comes to be Rs 75 million only in the case of the SSGCL as the average monthly sale of gas to the CNG stations by the SSGCL is Rs 50 million. The annual revenue loss is accumulated to Rs 2 billion and the board during last 18 months fails to recover Rs 3 billion charged by CNG sector from consumers.
Sources urged the FBR to issue notification under subsection (8) of section 3 of the Sales Tax Act 1990 for value of supply of CNG to CNG consumers as per prevailing market price in the same way as it was being issued in case of sale of petroleum products to avoid huge monthly sales tax revenue loss.
Similarly, immense number of consignments were presently stuck at different ports for long, due to lapse of procedural requirements but the FBR appears reticent to give any relaxation to the importers for its release, which not only creating liquidity problems for the business community but also restrained the authority to realize substantial revenue. They advised the government to fix next fiscal revenue target at rational level, if no revenue measure was announced in next budget.
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