The Federal Board of Revenue (FBR) has set a revenue collection target of Rs477.1 billion for the second quarter to meet the tax target of Rs1952 billion for the current fiscal year. An official source said that the tax collection target for the October-December period has been set on the basis of the recoveries made during the July-September period of the current fiscal year. The revenue collection estimates for October 2011 has been set at Rs133.1 billion. FBR has collected Rs373.8 billion during the July-September period of the current fiscal year showing an overall increase of 27.4 per cent as compared to tax collection of Rs293.4 billion during the same period last fiscal year. The source said FBR has to take major administrative and enforcement measures to improve compliance with expansion of the tax base to reach the figure of Rs477.1 billion during the second quarter of the current fiscal year.
Tax authorities are focusing on areas to enforce filing of sales tax and income tax returns by non-filers, recovery of tax arrears and audit of corporate sector, Association of Persons (AOPs) and individuals. FBR is also trying to recover illegal input tax adjustments from the claimants and monitoring the withholding tax regime. To meet the tax collection target, FBR is verifying cases where source of investment has been shown as foreign remittances or agricultural income to check authenticity of declarations made by rich people in their income tax returns. The field formations are ordered to report all such cases where source of investment has been declared as foreign remittances or agricultural income through verification from the concerned provincial departments or banks. Under the Income Tax Ordinance 2001, the tax department is not empowered to ask source of investment where property has been purchased from foreign remittances.
The tax exemption has been granted to foreign remittances under section 111 of the Income Tax Ordinance 2001. The investment made through foreign remittances cannot be probed into by the tax department. During the first quarter direct taxes collection increased by 27.7 per cent to Rs122.1 billion, sales tax collection increased by 34.9 per cent to Rs180.4 billion and FED increased by 6.7 per cent to Rs28.7 billion as compared to Rs95.7 billion, 133.7 billion and Rs26.9 billion of 1Q2010 respectively. Although the sales tax rate was reduced from 17 per cent to 16 per cent, still the growth rate in sales tax collection has been recorded. The custom duty collection also witnessed an increase of 14.4 per cent as Rs42.5 billion were collected as compared to Rs37.1 billion collected during 1Q2010. The tax collection increased by 24.6 per cent to Rs145.07 billion during September 2011 as compared to Rs116.4 billion collected during the same month last fiscal year. FBR has a target to collect Rs1952 billion during the FY2011 and this tax target has been divided into Inland Revenue of Rs1737 billion and customs duty of Rs215 billion. With strict compliance and enforcement, the tax authorities are hopeful that they would manage collection of the target. FBR has also changed its strategy and has started fixing monthly and quarterly tax collection for its field formations that have increased pressure on them to deliver.
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