The Federal Board of Revenue (FBR) has met its tax collection target for the first two months of the financial year, although the pace of growth remains well below the rate needed to achieve the government’s annual target.
Preliminary figures show that the FBR collected Rs1.722 trillion in taxes during July and August, around Rs12bn more than the two-month target of Rs1.71 trillion.
However, tax collections increased by only about Rs55bn, or 3.3%, compared with the same period last year.
Under targets agreed between the Pakistani government and the International Monetary Fund (IMF), the FBR is required to collect Rs15.263 trillion in taxes during the current financial year.
Achieving that target would require tax revenues to grow by around 17.4% compared with the previous year.
Analysts say the current pace of growth may not be sufficient to meet the annual target, meaning the FBR will need to significantly increase collections in the coming months.
Sources say stronger collections in July helped the FBR meet its combined target for the first two months.
In August, however, the tax authority fell short of its monthly target.
The FBR had been set a target of around Rs930bn for August, but preliminary figures indicate that collections stood at approximately Rs900bn by the end of the month.
Tax officials say stronger-than-expected sales tax collections contributed to the overall performance during the first two months.
The FBR collected more than Rs685bn in income tax during July and August.
That was around Rs74bn below the target set for the period.
Income tax collections also declined compared with the same period last year, falling by approximately Rs29bn, representing negative growth of around 4%.
The decline has raised concerns about the FBR’s ability to maintain the pace of revenue collection required to meet the government’s annual target.
Meanwhile, Pakistan’s provinces have agreed in principle to provide more than Rs1 trillion in grants to the federal government for defence and water-resource projects.
Meeting the two-month target is a positive development for the FBR, but the relatively low growth in overall collections and the decline in income tax revenues highlight the difficulties ahead.
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