July revenue grows 16% on customs duty
Economists said hike in the prices of imported goods and inflation were the main reasons behind the increase in year-on-year revenue collection in July
The pace of income tax and value added tax (VAT) collection in July of this fiscal year was slow, but the overall revenue collection increased by around 16% due to almost 38% growth in customs duty collection in that month.
Economists said hike in the prices of imported goods and inflation were the main reasons behind the increase in year-on-year revenue collection in July.
Besides, the import of some products – mainly commercial products with high tariffs – increased slightly in July, said the National Board of Revenue (NBR) officials.
They said customs duty collection increased significantly because many importers were waiting without taking delivery of imported goods to see what happens in the month of budget declaration. As those goods were cleared in July, revenue for them was collected in that month.
Keep updated, follow The Business Standard's Google news channel
Besides, there was a negative growth in customs duty collection in July of FY22. As a result, the growth rate appears higher in the same month of the current fiscal year, compared to the last one.
Towfiqul Islam Khan, senior research fellow of Centre for Policy Dialogue (CPD), told The Business Standard, "The growth in import duty and VAT is mainly driven by inflation. Hiked prices increased the consumers' expenditure, which in turn increased collection import duty and VAT collections.
He further said, "The NBR is reluctant to increase revenue collection by increasing efficiency. If it could do so, the tax on some commodities like fuel could be reduced to give relief to consumers."
Sources at the NBR said they collected a little over Tk17,700 crore as customs duty, VAT and income tax in July, which is around Tk3,000 crore less than the target for that particular month.
About Tk31,000 crore has to be collected every month on an average to meet the target of Tk370,000 crore revenue in FY23.
According to sources, the NBR is looking for reasons behind zero growth in income tax collection in July this year.
NBR Chairman Abu Hena Md Rahmatul Muneem will hold a meeting with field level officials today to review the revenue collection situation.
On condition of anonymity, a senior NBR official told TBS that the pace of revenue collection has always been a little slow in the first month of the fiscal year. Besides, there is a pressure to collect more taxes in June to achieve the target of the outgoing fiscal year, which is one of the reasons behind the decrease in revenue in July – the first month of the new fiscal year.
Muhammad Abdul Majid, former chairman of NBR, told TBS, "Increase in import of some products can be a reason behind the increase in customs duty collection in July, but we have to wait two or three more months to understand whether the import is actually increasing, and which way the trend of revenue collection is going."
According to NBR data, the growth in revenue collection was 4% in July of FY22. In that month, there was a negative growth of 2% in customs duty, 1.37% growth in VAT and 15% growth in income tax collection.
