FBR misses revenue target by Rs85 billion

The Federal Board of Revenue (FBR) failed to meet its revenue target by a staggering 85 billion rupees. As per reports, the reason behind the failure was the economy’s ‘lower than expected’ inflation rate.

The revenue watchdog collected just 872 billion rupees despite its target collection level sitting at 957 billion rupees. The 85-billion-rupee gap translates into an approximate 10 percent deviation from target revenue levels.

While the gap seems alarming, provisional data revealed that collection levels are, in fact, 26 percent higher compared to last year. As per reports, collection levels sat at a measly 677 billion rupees last year, outlining the progress the FBR has made over the past year.

The gap between revenue collection levels and the target amount has surged to 468 billion rupees during the first half of Fiscal Year (FY) 2024-25. Reports claim that meeting the target revenue levels might now be a herculean task.

Furthermore, recent controversies surrounding a purchase order of automobiles by the department might make it difficult for officials to perform their daily operations efficiently. Senator Faysal Vawda levelled corruption allegations against the board while also alleging that certain FBR officials threatened him for being a whistle-blower.

FBR chairman Rashid Mahmood Langrial ordered an internal investigation into these allegations, which might divert precious resources away from tax collection purposes. The procurement of cars would have reportedly boosted collection figures, which, according to provisional data, sit at 6.497 trillion rupees for the first seven months of FY 2024-25.

Experts have revealed that the revenue shortfall stems from a fall in import-based taxes, suboptimal growth in the manufacturing sector and, most importantly, low inflation levels.

Owning to Islamabad’s crackdown against illegal exchange operations and the SBP’s high interest rates, inflation has remained in single digits in the past few months.

As per reports, analysts have dubbed Islamabad’s revenue target of 12.313 trillion rupees for FY 2024-25 as ‘overly ambitious’. The revenue target stands 40 percent higher than the one set by Islamabad last year.

Islamabad believes that it can extract another 3.659 trillion rupees in revenue during FY 2024-25 from three main avenues. This will be possible if Gross Domestic Product (GDP) grows at a rate of three percent, the import growth rate touches 16.9 percent, and the manufacturing sector grows by 3.5 percent.

According to reports, real revenue collection levels in FY 2024-25 might touch 12 trillion rupees. The shortfall is likely to be remedied by cutting back on expenditures rather than levying additional taxes.