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Dar directs FBR to take steps for achieving tax collection target

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  • Dar directs FBR to increase its efforts to achieve true tax potential.
  • FBR faces a revenue shortfall of Rs225 billion for December 2022.
  • Revenue shortfall will now make it hard for government to convince IMF to revive its stalled programme.

Finance Minister Ishaq Dar has directed the Federal Board of Revenue (FBR) to make all possible efforts to achieve the true tax potential in the country as the body has missed the target for the outgoing month of December 2022.

The finance minister made the remarks while chairing a meeting on the revenue performance of FBR in Islamabad.

During the meeting, FBR Chairman Asim Ahmad gave a detailed presentation on revenue targets and performance of FBR for the months of November and December 2022.

It is pertinent to mention here that FBR faces a revenue shortfall of Rs225 billion for the outgoing month of December 2022; the tax collection machinery collected only Rs740 billion against the desired target of Rs965 billion.

This increased revenue shortfall will now make it hard for the government to convince the IMF to revive the stalled IMF programme without taking additional and substantial taxation measures such as a mini-budget for the current fiscal year.

The government is contemplating options for the imposition of Flood Levy in the range of 1% to 3% to fetch Rs60 billion. Other taxation measures towards direct taxation are also on the cards. But the government is in a catch-22 situation and has identified only those areas that earned lofty profits because across-the-board taxation during the time of prevalent stagflation might further erode already sluggish economic activities.

However, the FBR sources argued that the imports compression and lingering litigation in higher judiciary resulted in lowering the revenue collection target. They have conveyed to the IMF that the collection of pending revenue would be materialised till March 2023. So, the FBR’s annual target of Rs7.47 trillion would remain intact, they believe.

But independent analysts are of the view that it would be hard for the FBR to achieve the desired tax collection target of Rs7 trillion by the end of June 30, 2023. The FBR has so far collected Rs3.428 trillion in the first half (July-Dec) period of the current fiscal year against the desired target of Rs3.673 trillion. The FBR collected Rs2.9 trillion in the same period (July-Dec) of the last financial year 2021-22.

According to the official statement, the FBR has demonstrated a remarkable revenue collection performance in the first six months of the current financial year 2022-23 and has collected Rs3,428 billion for the first six months against Rs2,929 billion collected in the corresponding period of last year depicting an increase of 17%.

The FBR collected Rs740 billion for the month of December 2022 against Rs599 billion in the same month last year, showing an impressive growth of almost 24% compared to the same month last year. This performance is despite huge import compression and zero rating on petroleum.

Direct taxes collection continues to grow at a robust pace, which has shown a growth of 66% during December 2022 compared to December 2021, a clear indicator of the policy of shifting the tax burden on the wealthy and affluent. Direct taxes collection for the first six months has also registered an unprecedented growth of 49%. This was achieved despite the fact that certain policy interventions having a revenue impact of Rs250 billion introduced through Finance Act 2022 could not be implemented as these are sub-judice in the courts. The target for the month of December was Rs965 billion, which could not be achieved due to the aforementioned reason.

The revenue collection performance is also exceptional when viewed in the context that the FBR has also issued refunds of Rs176 billion during the first half of the current financial year as against Rs149 billion during the corresponding period of last year.

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In a first for history, PSX crosses the 77,000 milestone.

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At 77,213.31, the benchmark KSE-100 hit an all-time high, up 1,005.15, or 1.32%, from the previous close of 76,208.16.

The government’s readiness to seal an agreement with the International Monetary Fund (IMF) following the budget was cited by analysts as the reason for the upward trend.

Experts anticipate that in an attempt to bolster its position for a fresh bailout agreement with the International Monetary Fund (IMF), the budget for the fiscal year ending in June 2025 would set aggressive fiscal goals.

Budget for Pakistan, 2024–2025
Pakistan’s budget for the fiscal year 2024–25, with a total expenditure of Rs18.877 trillion, was presented on Wednesday by Minister of Finance and Revenue Muhammad Aurangzeb.

The Finance Minister, Muhammad Aurangzeb, outlined the budget highlights. He stated that the GDP growth target for the fiscal year 2024–25 is set at 3.6 percent, while the inflation rate is anticipated to stay at 12 percent.

He stated that while the primary surplus is anticipated to be 1.0 percent of GDP during the review period, the budget deficit to GDP is forecast to be 6.9 percent over the period under review.

According to the minister, tax income collection increased by 38% in the current fiscal year, and the province will receive Rs7,438 billion. The Federal Board of income expects to earn Rs12,970 billion in revenue for the upcoming fiscal year.

In contrast to the federal government’s projected net income of Rs9,119 billion, he stated that the federation’s non-tax revenue projections are set at Rs3,587 billion.

The federal government’s total outlays are projected to be Rs18,877 billion, with interest payments accounting for the remaining Rs9,775 billion.

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Pakistan currently has $14.38 billion in foreign exchange reserves.

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Pakistan’s commercial banks’ reserves, which stood at $5.28 billion at the conclusion of the week ending on June 7, rose by US$174 million, according to a central bank statement.

Reserving US$6.2 million less, the SBP now has US$9.10 billion in reserves. The causes for the decline in the reserves it had were not disclosed by the central bank.

The SBP released a statement that stated, “SBP reserves decreased by US$ 6 million to US$ 9,103.3 million during the week ended on 07-June-2024.”

The State Bank of Pakistan’s (SBP) foreign exchange reserves were reduced by US$ 63 million as a result of repaying external debt, with the reserves standing at US$ 9.093 billion as of earlier on June 6.

The central bank spokesperson said in a statement that as of the week that concluded on May 31, the nation’s total liquid foreign reserves were $14.31 billion.

In terms of net foreign reserves, commercial banks have US$ 5.22 billion of the overall foreign reserves, according to the SBP.

SBP reserves dropped by US$ 63 million to US$ 9,093.7 million during the week that ended on May 24, 2024, according to the announcement.

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In the local market, the price of gold plummets to Rs240,700/tola.

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Gold with a 24-karat purity level has dropped by Rs1200/tola on the local market.

Each tola of 24-karat gold is now selling for Rs240,700, with a further drop of Rs1029 bringing the price of 10 kilos of gold to Rs206,361. These figures are courtesy of the All Sarafa and Jewelers Association.

Meanwhile, after a $2 decline on the global market, one ounce of gold will be valued $2315.

A tola of gold was worth Rs 600 more on Wednesday.

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