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Tax exemptions cause Pakistan US$285m revenue loss

Publication Date : 07-09-2012


Pakistan's Federal Board of Revenue (FBR) figures yesterday revealed that taxes exemptions given to certain sectors caused the country 27 billion rupees (US$285.32 million) revenue loss in 2011-12.

The fall in revenue collection was witnessed in all federal taxes – 21 billion rupees in sales tax and federal excise, 3.8 billion rupees in direct taxes and 2.1 billion rupees in customs, according to FBR quarterly report for April-June 2011-12.

Instead of lamenting exemptions to certain sectors, the FBR in its report maintained that giving such exemptions reflected government resolve to provide relief to taxpayers and public at large in all taxes.

The FBR also released final revenue collection figures for 2011-12. It collected 1,883 billion rupees in 2011-12 as against target of 1952 billion rupees, showing a shortfall of 69 billion rupees.

The target was missed by 3.5 per cent despite unfavourable economic conditions, the report maintained.

According to the report, the Sindh Revenue Board collected 25 billion rupees on account of services.

By inclusion of 25 billion rupees in FBR collection, total receipts would go up to 1908 billion rupees.

There was a growth in net revenue collection of 20.9 per cent over actual realisation of 1,558 billion rupees during fiscal year 2010-11.

Another improvement witnessed was tax-to-GDP ratio which improved to 9.2 per cent in 2011-12 from 8.6 per cent during 2010-11.

The 2,381 billion rupees target set for fiscal year 2012-13 is challenging as about 27 per cent growth over previous fiscal year’s collection would be required to achieve the target.

Keeping in view the huge target, FBR field formations have to strive hard and make all-out efforts to achieve the revenue target of 2,381 billion rupees for the current fiscal year, according to the report.

In the outgoing fiscal year 2011-12, all the four taxes performed slightly well during the period under review except FED where there is a negative growth of 10.8 per cent.

Major reasons behind negative growth is abolition of Special Excise Duty (SED) both at import and domestic stages, reduction of FED rates of beverages from 12 per cent to 6 per cent and also reduction of FED rates on cement from 700 rupees per tonne to 500 rupees per tonne.

Collection under direct taxes stood at 738.8 billion rupees which is higher by 22.6 per cent as compared with the corresponding period’s collection of 602.5 billion rupees.

Similarly, an amount of 804.8 billion rupees was collected under sales tax head during fiscal year 2011-12, indicating a growth of 27.1 per cent over collection of 633.4 billion rupees in the comparable period of last year.

This is partially due to efforts to broaden the tax base by removing major sales tax exemptions and zero-ratings. Sales tax collection from imports registered a growth of 39.4 per cent. Around 15 per cent growth was witnessed in sales tax collection from domestic side.

As far as customs duty is concerned, 216.9 billion rupees was collected during 2011-12.

The collection of customs duty recorded a growth of 17.3 per cent over collection of 184.9 billion rupees in the corresponding period of last year.

This achievement was made despite modest growth of 6.1 per cent in the dutiable imports during the period under review.

US$1 = 94.63 Pakistani rupees


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