The Federal Board of Revenue (FBR) has announced a series of short-term and long-term measures aimed at mitigating an anticipated tax collection shortfall of over Rs 230 billion for the second quarter of the fiscal year 2024-25, covering October to December.
In October, the FBR collected Rs 877 billion, falling short of the target of Rs 980 billion by Rs 103 billion. Overall, the tax authority has gathered Rs 3,440 billion in the first four months of the fiscal year, against a target of Rs 3,636 billion, resulting in a cumulative shortfall of Rs 196 billion.
To address these discrepancies, the FBR has revised its economic assumptions related to GDP growth, imports, inflation, and large-scale manufacturing growth, which were initially used to set tax collection targets. The revised strategies include increased enforcement measures and adjustments to tax rates.
Notably, the FBR plans to enhance revenue through a new tax law, which is pending approval from the Law Division, and to combat tax fraud more aggressively by targeting individuals and companies involved in fraudulent activities.
New notices will be issued to over 190,000 high-net-worth individuals identified through third-party data, with an estimated tax recovery potential of Rs 7 billion.
Additionally, the government has consented to raise federal excise duties on sugary drinks and increase withholding tax rates on various imports and services, projected to generate an additional Rs 10.8 billion monthly.
The FBR is also in consultation with the International Monetary Fund (IMF) regarding contingency measures that could be implemented if the revenue collection continues to underperform.
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These measures may include further increases in advance income taxes and withholding taxes to bolster revenue streams.
As the FBR moves forward with these initiatives, officials remain committed to ensuring that pending sales tax refunds are processed efficiently, with a total of Rs 32 billion in refunds disbursed to exporters as part of their efforts to stabilize tax revenues.
