Raza Kazmi
ISLAMABAD: Federal Board of Revenue (FBR) has released the provisional revenue collection figures for the first eleven months of current fiscal year. According to the provisional information, FBR has collected net revenue of Rs. 4,170 billion during Jul-May period, which has exceeded the target of Rs.3,994 billion by Rs. 176 billion. This represents a growth of about 18% over the collection of Rs.3, 549 billion during the same period last year.
The net collection for the month of May was Rs. 386 billion, against a required increase of Rs. 214 billion, representing an increase of 69% over Rs. 229 billion collected in May 2020 and 168% of the target. The year-on-year growth of 69% is unprecedented particularly as it is realized on the heel of 57% in April. These figures would further improve before the close of the day and after book adjustments have been taken into account.
On the other hand, the gross collections increased from Rs. 3,674 billion during this period last year to Rs. 4,386 billion, showing an increase of 19.4 %. The amount of refunds disbursed was Rs. 216 billion compared to Rs. 125 billion paid last year, showing an increase of 42.3 %. This is reflective of FBR’s resolve to fast-track refunds to prevent liquidity shortages in the industry.
The improved revenue performance is a reflection of growing economic activities in the country despite facing the challenge of third wave of COVID-19. However, during the Eid holidays, revenue collection slowed down considerably.
Meanwhile, FBR’s efforts to broaden the tax base are expending apace. Early signs suggest such efforts are bearing fruits. As on 31-5-2021, income tax returns for tax year 2020 have reached 2.93 million Compared to 2.63 million in tax year 2019, showing an increase of 11.4 %. The tax deposited with returns was Rs.52 billion compared to only Rs.34 billion last year, showing an increase of 55%.
FBR has also released the information about Tier-I retailers who have been integrated with POS system. According to the information, 10,767 sales points have been integrated with Point of Sales Linked Invoicing System.
Pakistan Customs has collected Rs. 672 billion under the head of customs duty in first eleven months of FY 2020-21 against the assigned target of Rs. 565 billion and exceeded its target by Rs. 107 billion which is 19% more than the assigned target. Whereas during the month of May, 2021 an amount of Rs. 64 billion has been collected under the head of customs duty against the monthly target of Rs. 57 billion which is again 12% more than the assigned monthly target.
It is quite important to mention that an amount of Rs. 107 billion was collected more under the head of customs duty in first 11 months of current financial year as compared to FY 2019-20, despite the re-arrival of COVID-19 pandemic and has shown a growth of 19% as compared to previous financial year, which is quite remarkable.
During May 2021 smuggled goods worth Rs. 2.6 billion have been seized so far, while in May 2020 smuggled goods worth Rs. 1.5 billion were seized, thus showing a monthly increase of 74 %. Similarly, during last 11 months (July 2020- May 2021) of current financial year smuggled goods worth Rs. 52.5 billion have been seized as compared to Rs. 40.8 billion in Jul 2019-May 2020 of the last financial year thus showing an increase of 29 %.
Due to effective enforcement measures taken by Inland Revenue (IR) and Customs, additional revenue of Rs. 175 billion is collected in the current Financial Year out of which Inland Revenue (IR) has added around Rs. 100 billion. IR enforcement measures include recovery out of arrears, efficient audits, improved monitoring of sales tax, POS integration, broadening of tax base and monitoring of withholding taxes.
Similarly, out of Rs. 175 billion whereas the remaining additional Rs.75 billion have come from effective enforcement measures taken by Pakistan Customs. These measures include counter smuggling operations regarding tea, tyres, textiles, electronics, palm oil and POL. Besides enforcement measures, effective administrative measures like auction of goods, control measures against under invoicing, adjudication of court cases, recovery of arrears, DIRBS and audits have also increased the revenue generation.
During the current Financial Year from July to May, the major sectors for the collection of revenue include auto sector, banks, cement, POL, tobacco and sugar. Tax revenue of Rs. 108 billion is collected from the auto sector so far which was Rs. 72 billion in the last year showing growth of 51 percent. Likewise, revenue of Rs. 117 billion is collected from the banks in the current year which was Rs. 87 billion last year exhibiting increase of 34 percent.
FBR has collected Rs. 127 billion from the cement sector in the first eleven months which was Rs. 97 billion last year showing increase of 31 percent. The revenue collected from the POL is Rs. 577 billion which was Rs. 516 billion last year showing an increase of 12 percent. From the tobacco sector, FBR has collected Rs. 129 billion revenue which was Rs. 104 billion last year thus showing an increase of 24 percent. The revenue from sugar sector was Rs. 53 billion which was Rs. 31 billion last year showing a growth of 74 percent.
The Customs duty collections in the current year from the major items include vehicles, Iron Steel and Machinery and mechanical appliances. Customs duty of Rs. 98 billion is collected from vehicles which was Rs. 52 billion last year showing an increase of 86 percent. Customs duty from Iron and Steel remained Rs. 53 billion which was Rs. 42 billion last year showing a growth of 24 percent. Similarly, Customs duty from machinery and mechanical appliances is Rs. 38 billion which was Rs. 30 billion last year in the same period thus showing a growth of 26 percent.
Directorate General of Intelligence & Investigation-IR showed commendable performance during July 2020 to May 2021. During this period, Directorate General forwarded 1,491 Investigation Reports and Red Alerts to the field formations involving revenue amounting to Rs. 228 billion. During the period October 2018 to May 2021, Directorate General filed 146 complaints under Anti-Money Laundering Act, 2010 where more than Rs. 52 billion were involved. Directorate General seized 7,527 cartons containing 75,270,000 cigarette sticks during the period of July 2020 to May 2021.
Meanwhile, Pakistan became a member of TIR (International Road Transport) Convention in 2017 which has 77 contracting parties including China, Afghanistan, Iran, Turkey and all Central Asian Republics (CARs). After becoming member, Pakistan notified sea and land border points as TIR crossings i.e., Sust (Khunjerab) with China, Torkham & Chaman with Afghanistan, Taftan with Iran and Gwadar & Karachi are two sea ports.
In December, 2020 Gabd (Pakistan)-Reemdan (Iran) has been upgraded to international border crossing and now passengers/drivers can cross this border with valid visa. Consequently, FBR has notified Gabd as TIR border crossing point vides SRO. 622(I)/2021 dated 28th May, 2021. Gabd is located at a distance of 87 Km from Gwadar on Pak-Iran border and end point of Coastal Highway (N-10). Gabd is located at a distance of 137 km from Chahbahar Port and this Gabd-Reemdan route will play a vital in connecting the two ports of Gwadar & Chahbahar and thus synergizing their potentials.
Moreover, it provides additional route from Coastal areas of Baluchistan and Sindh to Iran and Turkey & Azerbaijan in addition to already available route of Taftan-Mirjaveh (Iran). Recently, all stake-holders have focused on the development of TIR regime and TIR operations have gained momentum. In May 2021, one Pakistani vehicle took herbal medicines to Uzbekistan under TIR. While three vehicles, two from Turkmenistan and one Uzbekistan, brought Grey Fabric and cattle hides respectively under TIR. On return these vehicles transported back sports goods from Pakistan.
Recently, more logistic companies have shown interest in entering TIR operations and after approval of their applications by TIR National Approval Committee; their vehicles are under inspection for granting of necessary authorizations.
The objective of the TIR Convention is to facilitate international transit through simplified and hassle-free Customs transit procedures and an international guarantee system. Customs procedure takes place at origin and destination rather than at each border crossing, using a single guarantee. En-route, the customs seals are checked to secure the cargo.