Court restriction on telecom tax costs Rs55 billion: FBR

ISLAMABAD: Federal Board of Revenue (FBR) has incurred loss of Rs55 billion due to restriction imposed by Supreme Court of Pakistan on collection of tax on phone services.

The FBR in its year book 2018-2019, said that during the last fiscal year it had missed the revenue collection target by Rs321.5 billion due to various reasons.

The FBR said that a loss of Rs55 billion was incurred due to suspension of withholding tax on telecommunication services by the Supreme Court of Pakistan.

The other reasons for revenue shortfall included: petroleum Rs96 billion; reduced government spending Rs80 billion; import compression Rs16 billion, reduced rates of salary income Rs50 billion and reduction in customs duty Rs50 billion.

The FBR collected Rs. 3,828.5 billion during FY 2018-2019 against Rs. 3,843.8 billion during FY 2017-2018 indicating a negative growth of 0.4 percent.

The revised revenue target of Rs. 4,150 billion has been achieved to the extent of 92.3 percent.

The direct taxes, sales tax, FED and customs missed their respective targets by 12.9 percent, 2.1 percent, 10.5 percent and 6.7 percent, respectively.

During FY 2018-2019 the overall growth in net tax collection has been declined by 0.4 percent.

The collection of FED grew by around 11.6 percent and customs by 12.7 percent during FY 2018-2019, whereas the sales tax and direct taxes recorded a negative growth of 1.8 percent and 5.9 percent respectively.

As per the collection FY 2018-2019 the sales tax is the top revenue generator with 38.1 percent share followed by direct taxes with 37.8 percent, customs 17.9 percent and FED 6.2 percent.

During FY 2018-2019 the share of customs duty and FED has increased, whereas the share of direct taxes and sales tax has decreased slightly.

The FBR said that the overall growth in collection remained dismal during FY 2018-2019. The overall collection witnessed decline of 0.4 percent, which is Rs. 15.3 billion lesser than the collection of FY 2017-2018.

It is pertinent to mention that last time the negative growth (-2.6 percent) was recorded in 1967-68 in the FBR revenue collection.

A look on the monthly growth trend indicates a very good increase in July 2018 and May 2019 but during the remaining ten months either growth was below the double digit or negative.

As a whole during the year negative growth in revenue was recorded during five months as compared to corresponding months of the previous year, which is in fact very unusual behavior.

The revenue performance during April and June have been very poor with around (-) 30.7 percent and (-) 8.9 percent negative growth.

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