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FBR collects Rs4,725 bn during the outgoing financial year 2020-21 - Inside Financial Markets

FBR collects Rs4,725 bn during the outgoing financial year 2020-21

The Federal Board of Revenue (FBR) has surpassed its revised annual collection target of Rs4,691 billion and fetched net provisional collection of Rs4,725 billion during the outgoing financial year 2020-21 ending on June 30, 2021.

However, the FBR remained unable to achieve its initially envisaged tax collection target of Rs4,963 billion for 2020-21, which was revised downward to Rs4,691 billion in line with the agreement of the IMF.

The FBR made net collection of Rs555 billion in June 2021 that helped the bureau to jack up its overall collection to Rs4,725 billion on June 30, 2021 night. The FBR’s collection stood at Rs4,170 billion during the first 11 months (July-May) period of the current fiscal year, so after adding collection of June 2021, the overall collection went up to Rs4,725 billion. The FBR has not so far issued a press release and the Board will make a formal announcement on Thursday (today).

It will be the first fiscal year 2020-21 whereby the FBR has achieved net revenue collection growth in the range of 18.2 percent. In the first two fiscal years under the PTI led regime, the FBR’s revenue growth had remained flat in 2018-19 and 2019-20. In the second year 2019-20, the Covid-19 pandemic had negatively impacted the FBR’s growth endeavors.

In another strange move, the FBR continued making payments of refunds through technical supplementary grant (TSG) and the Board made payments of refunds to the tune of Rs40 billion through the TSG during the outgoing financial year. With this performance on the FBR’s revenue front in outgoing fiscal year, now chances have emerged that the government might be able to achieve its envisaged budget deficit target of 7 percent of GDP for outgoing fiscal year ending on June 30, 2021. The fiscal accounts would be finalised within three weeks period.

“Yes, the FBR has surpassed its revised tax collection target and so far, the collection stands at Rs4,725 billion on June 30, 2021” a senior FBR official confirmed while talking to The News here on Wednesday night.

The official said that the FBR’s gross collection stood at Rs4,976 billion till June 30, 2021 and the Board paid refunds of Rs251 billion, so the net collection fetched Rs4,725 billion. The FBR’s gross collection was standing at Rs4,133 billion during the last financial year 2019-20 and the Board had paid refunds to the tune of Rs136 billion in this period. The FBR’s annual growth in revenue collection stood at 18.2 percent in 2020-21 compared to the same period of the last fiscal year 2019-20.

On refund payments, the official sources said that the FBR made payments of Rs251 billion refunds in cash and adjusted Rs73 billion against due refunds amount while it provided Rs40 billion through TSG, so in totality the refund payments in 2020-21 stood at Rs364 billion. In the last financial year, the FBR had paid cash refunds amount of Rs136 billion, adjusted Rs40 billion and provided Rs100 billion through TSG, so the total refunds payment stood at Rs275 billion. The FBR made more refunds’ amount in outgoing fiscal year 2020-21 in the range of 32 percent compared to the last fiscal year.

The FBR had collected Rs4,170 billion during Jul-May period against desired target of Rs3,994 billion, so collection exceeded by Rs176 billion. This represents a growth of about 18pc over the collection of Rs3,549 billion during the same period last year.

The net collection for the month of May was Rs386 billion, against a required increase of Rs214 billion, representing an increase of 69pc over Rs229 billion collected in May 2020 and 168pc of the target. The year-on-year growth of 69pc is unprecedented, particularly as it was realized on the heel of 57pc in April.

Syed Zaki Hussain

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)