Special audits to maximise Tax

In order to maximise tax collection, the FBR has started scrutiny of special audits of giant sectors including sugar, cement, oil refineries, beverages and others to identify loopholes and gaps for the purpose of effective enforcement.

Official sources in the FBR disclosed that the domestic GST so far showed impressive growth in the range of 50 percent in first two months and now the FBR identified sectors and started conducting indepth analysis in a bid to maximise collection in months ahead.

The FBR found that the taxes on High Speed Diesel (HSD) is not fully materialised because of rampant surge in smuggling. The auditors of oil refineries have been asked to come and explain its reasons.

“We have done stocktaking of important sectors and knew that some sectors were selling products to unregistered entities/persons,” said the official and added that the FBR decided that in such cases input adjustments would not be allowed.

In sugar, the FBR has achieved phenomenal growth but still the tax collection is not up to the desired mark. In cement sector, the FBR has found alleged massive tax evasion. Same is the case of OMCs and oil refineries as there is substantial mismatch in input and output, they added.

The top guns of the FBR have ruled out possibility of any further taxation measures over next few months and argued that there was no room for any further upward adjustments in tax burden. Initial rough estimates suggest that the FBR collection could fetch Rs4,800 to Rs5,000 billion against the desired target of Rs5,503 billion so this shortfall of Rs500 to Rs700 billion will have to be bridged through improved non-tax revenue collection or decreased expenditure to bring the budget deficit within the desired and agreed limits of the IMF loan. The breach on part of budget deficit and primary balance possessed threat to derail the IMF programme under 39 months Extended Fund Facility (EFF), added the official.

However, till September 26, the FBR has so far collected Rs263 billion against the desired monthly target of Rs491 billion for displaying Rs1,071 billion on its board on September 30, 2019 in line with the IMF requirements. The FBR has made internal adjustments for achieving Rs5,503 billion annual collection target whereby the envisaged targets of Inland Revenues (IR) including Income Tax, Sales Tax and Federal Excise Duty (FED) was revised upward while the target of Customs Duty was slashed.

“Against the desired tax target of Rs1,071 billion for July-September period of 2019-20, the FBR collection likely to climb to Rs960 to Rs980 billion on September 30, 2019, indicating a shortfall of Rs91 billion to Rs110 billion,” top officials of FBR

The internal adjustments of the FBR shows that the Income Tax target stood at Rs2,027 billion, Sales Tax Rs2,203 billion, FED Rs384 billion and Customs Duty Rs889 billion. The FBR has extended timeframe for Friday and Monday and designated branches of NBP would remain open on September 27 and September 30 till 10:00pm.

For any tax related service contact us at finperial@gmail.com

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