The Federal Board of Revenue (FBR) announced on Sunday that it must collect Rs1.196 trillion in September 2024 to meet the first-quarter revenue target of Rs2.652 trillion, as agreed with the International Monetary Fund (IMF). Failure to meet this target by more than Rs60 billion could result in the IMF demanding additional revenue measures, such as a mini-budget.
In the first two months of the fiscal year (July and August 2024), the FBR collected Rs1.456 trillion, falling short of the Rs1.554 trillion target by Rs98 billion. The shortfall has raised concerns about the FBR’s ability to meet its September target, crucial for avoiding further IMF-imposed financial adjustments.
The FBR’s data shows a gross revenue collection of Rs1.588 trillion for July and August 2024. However, after issuing Rs132 billion in refunds—44% more than the previous year—the net revenue stood at Rs1.456 trillion.
Significant growth was noted in domestic income tax collection, which increased by 36% to Rs593 billion, and domestic sales tax collection, which grew by 40% to Rs314 billion. Federal Excise Duty (FED) collection also rose by 13% to Rs86 billion. Overall, domestic tax collection saw a 35% growth.
However, the import sector did not maintain the same growth due to continued import compression. Imports in August 2024, in U.S. dollar terms, decreased by 2.2% compared to August 2023, and by 7% in PKR value. This decline impacted Customs duties and other taxes collected at the import stage. Despite a modest 4% increase in Customs duties, the overall net collection growth registered a 21% increase compared to the previous year.
The FBR is optimistic about achieving the first-quarter revenue targets due to expected economic recovery in September, spurred by a lower policy rate and other recent government interventions. The anticipated growth is also driven by ongoing digitization and reforms within the FBR, closely monitored by the prime minister and finance minister. These reforms include end-to-end supply chain monitoring, automated production oversight, AI-based data integration, and strict integrity management of the FBR workforce, alongside business process revamps aimed at facilitating business growth.
