The Federal Board of Revenue (FBR) has suffered massive revenue loss of Rs 22 billion from low tax collection on the import of old and used vehicles during July-January (2019-20) due to change in import policy for second hand cars.
According to Business Recorder, a document of the FBR on factors responsible for affecting revenue collection during 2019-20, change in the import policy for used vehicles has negative revenue of around Rs 22 billion (all taxes at the import stage). The FBR said that loss of revenue due to sharp drop in imports is around Rs 307 billion which is much more than revenue shortfall of Rs 101 billion during July-January (2019-20).
Other factors which have adversely affected revenue collection by the FBR are sharp decline in large scale manufacturing. Auto sector is a case in point which has shown decline of 39% in income tax and 28% in sales tax, when compared with data from last year. Only Rs 47 billion has been collected during July-January (2019-20), against expected collection of Rs 88 billion, resulting in budgetary loss of more than Rs 40 billion.
FBR said that lower acceptability of documentation of economic transactions is also one of the factors which have adversely affected revenue collection. Furthermore, the introduction of the new customs slab of zero percent in Pakistan Customs Tariff for raw materials and intermediary goods has revenues to decline by around Rs 8.4 billion.
A 3d animation professional with over 20 years of industry experience having served in leading organizations & production facilities of Pakistan, an avid car enthusiast and petrolhead with an affection to deliver writings to help shape opinions. Formerly written for PakWheels as well as major publications including Dawn. Founder of CarSpiritPK.com