KARACHI: The Federal Board of Revenue (FBR) has initiated a campaign to make up for the losses caused by lower oil prices in the estimated targets of sales tax collection. It is feared that sales tax collection would be short of several billion rupees impacting the overall revenue collection target of FBR.
The government reduced incidence of sales tax on all petroleum products for the month of May 2016. Sales tax on motor spirit is reduced to Rs9.89/liter in May from Rs12.89 in April 2016; ST on HOBC is reduced to Rs10.65/liter in May from Rs13.9/liter in April; tax on kerosene for May stands at Rs3.6/liter down from Rs4.76/liter in April; sales tax on HSD for May is Rs25.16/liter down from Rs29.57/liter in April while tax on light diesel oil is fixed at Rs3.38/liter for May 2016 as compared with Rs4.72/liter in April 2016. Sales tax rates on petroleum products are declining since last year.
The Board has advised the formations across the country to generate the sum either from the arrears outstanding against the taxpayers or through creating fresh demands. Sources said the Inland Revenue always turns to the CREST, which always provides the opportunity to generate additional requirements.
The Sales Tax wing of FBR developed the CREST to provide a clean and fully automated voluntary compliance system to the taxpayers. But, there are always discrepancies in there which can be pursued to realize some revenue.
Sources said FBR recently had a video conference with the Inland Revenue formations across the country, and officers were informed that the Board had been categorically instructed by the ministry to meet the assigned revenue collection target.
In the last one and a half year, prices of oil in the international market have gone down by 75 percent, falling from the high of $110 per barrel to below $28.
FBR was assigned a revenue collection target of Rs3.104 trillion for the current fiscal year, which is 20 percent higher compared with the collection of Rs2.588 trillion in the last fiscal year.
An official said lower oil prices would not have much impact on overall revenue collection; this year FBR was relying more on direct taxes as its growth during the ongoing fiscal year was estimated at 31 percent to Rs1.347 trillion. Direct tax collection surged by 16.17 percent to Rs1.027 trillion in FY 2014-2015 compared with Rs884 billion in FY 2013-2014.
Such ambitious growth expectation in direct taxes leans on latest changes introduced by the government in the federal budget 2015-2016 regarding withholding taxes. The withholding tax rates have been increased for non-filers of income tax returns.
The Federal Board of Revenue (FBR) has collected over Rs2.1 trillion during July-March 2015-2016 as compared Rs1.75 trillion in the corresponding period of the last fiscal year, depicting 19.7 percent growth.
The revenue collection trend during the first nine months of the financial year augurs well for the efforts of FBR towards achievement of the annual assigned revenue targets, an official said.