ISLAMABAD: The Federal Board of Revenue missed its revenue collection target by nearly Rs386 billion in the first half of the current fiscal year, as a decline in imports and lower-than-expected inflation impacted tax receipts.
According to provisional figures released on Tuesday, FBR collected Rs5.623 trillion between July and December against the target of Rs6.009tr. However, the collection is 26pc higher compared to the year-ago figure of Rs4.466tr.
The shortfall is largely attributed to reduced tax collection from imports due to a slowdown in trade, sluggish manufacturing growth and unexpectedly low inflation, which has dropped to single digits in recent months.
December alone saw a gap of Rs47bn, with Rs1.326tr collected against a target of Rs1.373tr. However, this represented a 35pc increase compared to Rs984bn collected in December last year.
Slowdown in imports, low inflation hamper tax collection in July-December
The government’s overly ambitious revenue target of Rs12.913tr for FY25, a 40pc increase from FY24, is now backfiring. The refusal to cut expenses and the unexpected hike in the revenue target make it seem nearly impossible to achieve.
The FBR paid Rs273bn in refunds to taxpayers in the first half of the FY25, up from Rs234bn in the same period last year, representing a 16.66pc increase. The FBR paid Rs70bn in refunds in December compared to Rs38bn in the same month last year, a reduction of 84pc.
The government believes that the additional revenue of Rs3.659tr in FY25 will be achieved from three main factors. It hopes that GDP growth of 3pc, large-scale manufacturing expanding at 3.5pc with inflation at 12.9pc, and imports growing at 16.9pc will collectively yield an additional Rs1.863tr in revenue in FY25.
Independent economists estimate that real revenue collection in FY25 will be approximately Rs12tr.
