Realisation of FBR target of Rs3,908 billion linked to revival of economic activities

ISLAMABAD: The downward revised target of Rs3,908 billion agreed with the IMF for the current fiscal year can only be achieved with the restoration of economic activities in the coming Ramazan and Eid.

The FBR also reversed its concessionary SRO for allowing import of 61 health related items after the outbreak of COVID-19 pandemic recommended by the Ministry of Health as 19 items out of 61 were issued with brand names in SRO with effect from March 20 to April 16, 2020 for 26 days. Now the FBR issued an SRO without mentioning any specific brand names after facing criticism. "During the period of SRO, the import under this specific brand names stood at Rs7 billion," the FBR Spokesman Dr Hamid Ateeq Sarwar said.

The FBR hopes that the reduction of customs duty on edible oil and palm oil seeds and abolition of withholding taxes on pulses should result into decreasing prices by Rs10 per kg of both these commodities in the domestic market. “We hope to achieve the revised agreed target of Rs3,908 billion for the current fiscal year but it will depend upon restoration of economic activities as business transactions are not happening because of the lockdown. We have estimated to collect Rs400 billion in ongoing month (April) but so far the collection stood at Rs150 billion and the FBR may go up to Rs200 billion till the end of this month," FBR’s Member Inland Revenue (IR) Policy Dr Hamid Ateeq Sarwar said while briefing reporters here at the board’s headquarters on Tuesday.

Accompanied by FBR’s Member IR (Operation) Seema Shakil, Dr Hamid Ateeq Sarwar explained that the FBR issued generic SRO related to 61 items after reversing concessions with brand names. It was done on the recommendation of the Ministry of Health, he added.

When asked about the revised FBR collection estimates by the IMF to the tune of Rs3,908 billion for the current fiscal, he said that the FBR would be able to achieve the desired target with the hope that the economic activities would be restored in the months ahead. He said that the FBR had estimated to collect Rs500 billion in March 2020 but it could fetch only Rs310 billion. For April 2020, he said the FBR was envisaging collection of Rs400 billion but it stood at Rs150 billion so far and might collect Rs200 billion maximum.

The FBR had envisaged tax collection target of Rs5,555 billion on the eve of budget for 2019-20 but after completion of the first review under $6 billion IMF’s Extended Fund Facility (EFF), the target was revised downward to Rs5,238 billion. On the occasion of incomplete second review, the IMF staff and Pakistani officials had agreed to revise downward the FBR target to Rs4,803 billion. After the outbreak of COVID-19 virus, the IMF has now further slashed down the target to Rs3,908 billion till June 30, 2020.

When the FBR official was asked about the next fiscal year target of Rs5,101 billion estimated by the IMF, Dr Hamid Ateeq said the FBR hoped that full-fledged economic activities would be restored after the first quarter (July-Sept) period in the next fiscal year 2020-21, so the desired target would be achieved.

He said that the FBR abolished the Regulatory Duty (RD) on the import of sugar and wheat and if the price of the sweetner crossed Rs90 per kg and wheat 1,700 per 40 kg, then the import of sugar and wheat would become cheaper in the country, so this upper ceiling was set to keep the domestic prices within the desired range.

The FBR’s Member IR Operation, Seema Shakil, said that they had so far paid Rs175 billion in refunds during (July-April 15) 2019-20 against Rs107 billion in the same period of 2018-19, reflecting an increase of 64 percent. This amount is other than the refund of Rs45 billion paid under the Prime Minister’s package. So the total refunds would be higher than indicated under the IMF program, the FBR official added.

During (July-April 15) 2019-20 period, the FBR has paid Rs 96 billion in sales tax refunds against Rs21 billion in 2018-19, reflecting an extraordinary increase of 357 percent. Out of this amount of Rs 96 billion, the FBR has paid Rs52 billion under the FASTER system and remaining amount of Rs44 billion was other than the FASTER system.

The income tax refund payments stood at Rs69 billion during the period under review against Rs73 billion in the same period of 2018-19, reflecting a decrease of 5 percent. The FBR has paid Rs10 billion as customs duty rebate to the exporters during (July-April 15) 2019-20 against Rs13 billion paid in the same period of 2018-19, reflecting a decrease of 23 percent. The FBR has not contacted any taxpayer for payment of refunds and issuing refunds on the basis of processing of the system, she said.Ms Seema Shakil disclosed that the FBR has also processed income tax refunds and even taxpayers are unaware that they are going to get income tax refunds directly into their bank accounts because they have not updated their IBAN bank accounts. For this purpose, IBAN bank accounts of the taxpayers are needed to be updated in their IRIS profiles, she added.

The income tax refunds have been divided into two slabs. The first slab of income tax refunds is between Rs 1 million to Rs 5 million. An amount of Rs2.1 billion as income tax refunds has been processed where IBAN has been updated and would be directly credited into the bank accounts of taxpayers. However, Rs 1 billion refunds involve those accounts where the IBAN has not been updated. The second category/slab of income tax refunds ranges between Rs5 million to Rs 50 million. The FBR has finalized payment of R8 billion to be released to the taxpayers. Here again an amount of Rs700 million was stuck since the IBAN was not updated. Overall, an amount of around Rs13 billion is ready to be issued to around 10,000 taxpayers in both the categories of income tax refunds.

The FBR has requested around 6,000 taxpayers to update their IBAN for receiving income tax refunds of Rs 1 billion. These 6,000 persons have not updated their IBAN. “The income tax refunds have been processed on first come first served basis,” the FBR member said.

Due to health and security concerns, FBR Member Inland Revenue (Operations) advised the taxpayers and refund claimants to ensure response to the queries of FBR through email.