ISLAMABAD: Decrease in sales tax on petroleum products, subsidies to the agriculture sector and decline in exports are major causes for shortfall in revenue collections during the first quarter of the fiscal year 2016-17, says a report of the Federal Board of Revenue (FBR).
Earlier, observing a shortfall of Rs 50 billion during the first quarter, Finance Minister Ishaq Dar had ordered the FBR to prepare a report to identify causes of low collections. The shortfall is expected reached Rs 61 million in October.
In its report, the FBR termed the increase in property valuation and less filing of tax returns were the major reasons of missing the revenue target, besides informing that zero-rated exemption to five textile sectors also shed negative impact on sales tax collections, sources said.
The report states that subsidies given in the federal budget for 2016-17 also contributed to low tax collections. Decreasing sales tax rate on five petroleum products, especially on MS motor spirit and high speed diesel, brought a loss of Rs 34 billion to the FBR, the report revealed, adding that the board was collecting Rs 4 and 6 per litre sales tax during the corresponding period of the last year.
Reducing sales tax from 17 percent to 5 percent on fertilisers also caused of a shortfall of Rs 2 billion, the sources said, adding that decline in number of tax returns filing also a major reason.
During first quarter of FY2016-17, 89,000 returns were filed, while the same stood at 104,000 during same corresponding period of last year. In order to meet target during last year, heavy advance taxes were collected that is also a reason of shortfall.
They further said that it is hoped that the government would take new steps in light of the report, while the FBR will put focus on expanding the tax base to increase revenue collections.
