The Federal Board of Revenue (FBR) began the fiscal year 2022-23 by collecting Rs. 458 billion in taxes, surpassing the goal by Rs. 15 billion.
The tax authority has revealed the preliminary income data for July 2022. According to preliminary data, the FBR earned a net income of Rs. 458 billion in July 2022, above its objective of Rs. 443 billion by Rs. 15 billion. This is a 10 percent increase over the 417 billion rupees collected during the same time the previous year.
When book changes are accounted for, these numbers will improve much better. These July totals are the highest ever recorded. This exceptional revenue performance is a result of FBR sustained commitment to expanding on its growth trajectory from the previous year.
In contrast, the gross collection climbed by 11 percent from Rs. 438 billion in July of the previous year to Rs. 486 billion. Similarly, the number of refunds given out in July was 28 billion rupees, a 32 percent rise over the previous year’s 21 billion rupees. This demonstrates FBR’s strong commitment to expediting refunds and minimizing industry-wide liquidity constraints.
Significant revenue growth in July is primarily attributable to several policies and revenue initiatives included in the Finance Act of 2022. In contrast to the past, there is an obvious emphasis on taxing the wealthy. Due to this paradigm shift, domestic taxes generated 55% of the revenue while import taxes stayed unchanged at 45%. This has caused a trend reversal. Historically, import taxes accounted for 52-53 percent of total revenue.
Likewise, the growth in domestic Income Tax is almost 31 percent which is a remarkable shift towards direct taxation. Similarly, there is a large increase in the amount of Advance Tax collected in July. There is also a 118 percent increase in Advance Tax on the sale of properties u/s 236-C due to enabling of a withholding provision applicable irrespective of the holding period.
Likewise, a 40 percent increase in Advance Tax u/s 147, especially from banking companies, is due to a change in the tax rate.
Similarly, an increase in the rate of Federal Excise Duty (FED) on cigarettes/tobacco has paid its dividends. The FED from tobacco has registered a record growth of over 47 percent or Rs. 2.6 billion and the corresponding increase in Sales Tax from Tobacco Sector has registered a record 67 percent growth. The increased FED on International Air Travel has also registered a growth of over 200 percent.
Furthermore, Pakistan Customs has collected Rs. 67 billion under the head of Customs Duty during July 2022 against Rs. 65 billion collected during the same period last year, registering a marginal growth of 2.58 percent. However, it suffered a dip against the target fixed for July of Rs. 77 billion, which is due import compression policy of the government, aiming to control the outflow of US Dollars. Furthermore, FBR suffered a loss of about Rs. 11 billion in sales tax against zero rating of POL products.
It is pertinent to mention that Income Tax Returns for Tax Year-2021 have reached 3.4 million compared to 3.0 million in Tax Year-2020, showing an increase of 13 percent. The tax deposited with returns during Tax Year 2021 was Rs. 76 billion compared to only Rs. 52 billion in Tax Year 2020, showing a significant increase of 46 percent. Furthermore, building further on its ongoing drive to integrate Tier-1 Retailers across the country, around 23,265 point of sale (POS) terminals have been integrated with the real-time POS reporting system of FBR.