Customs face 37pc revenue shortfall in March amid lockdown

KARACHI: Pakistan Customs saw duty collection fall short of up to 37 percent vis-à-vis the targets in March – a nightmarish disaster for the tax authorities amid coronavirus-induced lockdown that adversely hurt the trade activity, it was learnt on Saturday.

The duty collection position of the three custom collectorates revealed that coronavirus and subsequent lockdown left adverse effects on tax revenue. In March, Model Customs Collectorate (MCC) Port Muhammad Bin Qasim, MCC Appraisement East and MCC Appraisement West missed their collection targets by 37 percent, 32 percent and 37 percent, respectively,

MCC Port Qasim was assigned customs duty target of Rs24.2 billion for March, but it managed to collect Rs15.34 billion. Similarly, MCC Appraisement East was assigned Rs17.4 billion as target, but it could be able to collect Rs11.77 billion, less 32 percent than the target. The MCC Appraisement West was assigned Rs15.4 billion as the monthly target, but it collected only Rs9.65 billion in the month under review.

Customs collectorates missed duty collection target in March with big margins due to contraction in imports amid ongoing lockdown to contain coronavirus spread.

The restriction resulted in decline of imports by 20 percent to $3.3 billion in March. Imports stood at $4.12 billion in the same month of the last year.

Sources in Pakistan Customs said March happens to be a crucial month every year in terms of revenue collection because the third quarter of a fiscal year ends with this month.

“This year’s March is to be remembered as the duty collection disaster as most of the collectorates missed the monthly target with big margins,” an official said, requesting anonymity.

The revenue collection was already witnessing consistent decline till end of February due to economic slowdown with growth expected to fall two to three percent this fiscal year. Coronavirus broke out late last year in China and spread at a fast pace across many countries of the world till February-end. The contagious infection incurred huge losses to global financial markets, besides claiming large number of human lives.

The collection of customs duty at import stage is known as the barometer for collection of sales tax and withholding import tax at the clearance stage.

The sources said the import consignments were badly hurt due to closure of trade and transport activities after Sindh administration announced lockdown in a bid to prevent spread of coronavirus. There was uncertainty owing to increase in coronavirus cases and the situation got worst after Sindh announced lockdown on March 22 and that still continues.

The sources said although the federal and provincial governments took measures to resolve issues of timely customs clearance, the overall demand fell due to the lockdown. Imports are expected to further drop and subsequently revenue collection in the coming months would adversely be impacted.