Dr. Shamshad Akhtar, interim finance minister, has asked information from the Federal Board of Revenue (FBR) on its strategy for bridging the growing revenue gap and meeting the yearly target.
According to local media, the government is currently focusing on repairing significant revenue leakages totaling Rs. 1 trillion in order to fulfill the annual target of Rs. 9.4 trillion.
Smuggling was designated as one of the areas for enforcement action during a high-level meeting presided over by the minister. However, no press statement was issued following the conclusion of the conference.
As part of the International Monetary Fund (IMF) policy, the government cannot afford quarterly income deficits.
FBR and Finance Ministry Meeting For Tax Collection Target
To meet the agreed-upon targets by September 2023 while maintaining fiscal discipline, revenue leakages must be addressed.
According to sources, the FBR has identified five critical areas for plugging leakages totaling Rs. 1 trillion at a time when the tax collection system may face a revenue shortfall due to reduced imports.
Following the slowing of the economy, the administration did not want to take any additional steps to close the tax gap.
According to FBR management, five important holes may be closed to make up for the anticipated revenue loss in the coming months.
Track and Trace System
The FBR also recognized a tax evasion issue in the cigarette business. The Track and Trace System is being used on the properties of significant organizations such as Pakistan Tobacco Company (PTC), Philip Morris Pakistan (PMI), and Khyber Tobacco.
Numerous more local manufacturers have signed MoUs with the FBR, but the Track and Trace system is still not completely operational.
The third area for increased taxation, according to the FBR, is catching sales tax evasion.
After its Intelligence and Investigation (I&I) IRS identified down the largest scam involving phony invoicing in Karachi that had linkages to other parts of Punjab, including Faisalabad, the FBR feels there was a substantial chance to stop leaks.
The fourth sector was concerned with preventing money and other things from being smuggled across Iran and Afghanistan.
To read our blog on “FBR exceeds its August tax collection target by Rs. 20 Bn,” click here.
