The Federal Board of Revenue (FBR) is anticipated to face a revenue shortfall of approximately Rs. 275 billion during the first quarter of the current fiscal year. A significant deficit of Rs. 175 billion is expected this month alone, prompting discussions of a potential mini-budget amounting to nearly Rs. 1 trillion.
To meet the annual tax target of Rs. 12.97 trillion, FBR has set a goal of Rs. 1.1 trillion for the current month. However, sources from NetMag indicate that the revenue agency is likely to fall short, with a mini-budget proposal aimed at covering the shortfall expected to be introduced soon after the end of the month. Among the proposed measures are the elimination of sales tax exemptions and the imposition of additional withholding taxes.
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Despite collecting over Rs. 450 billion in September, FBR is projected to close the month with a total of approximately Rs. 950 billion in tax revenues. The combined shortfall for August and September could reach around Rs. 250 billion, casting doubts on the agency’s ability to meet monthly targets, let alone recover previous deficits.
Internal evaluations within the FBR suggest that persistent monthly shortfalls may jeopardize the achievement of the annual tax target by the end of the fiscal year. In light of the tax collection targets agreed upon with the International Monetary Fund (IMF), there is little room for revenue gaps. Instead of broadening the tax base to enhance collection, the burden is likely to fall disproportionately on the existing taxpayer base.
The mini-budget, if implemented, may seek to standardize the sales tax rate by removing current exemptions and increasing the rates of withholding taxes.
