Revenue earning picture in Jul-Feb of FY21
- Target Tk1,96,147crore
- Collection Tk1,51,472 crore
- Deficit Tk44,675 crore
- Deficit in VAT sector Tk19,009 crore
- Revenue growth up to February 4.05%
- Average growth in last 5 years 10.20%
Revenue collection saw a 4.05% growth in the first eight months of the fiscal year up to February, though the National Board of Revenue fell short of the target by Tk44,675 crore.
The deficit in the VAT sector – derived from the sales of goods and services – alone is Tk19,009 crore due to low consumption.
VAT is the biggest source of revenue for the government, NBR officials have said, adding that the revenue board has taken various initiatives, including giving out rewards for paying VAT by using electronic fiscal devices (EFDs), to encourage VAT payment.
However, the target could not be reached due to low consumer spending amid the pandemic, although activities in most of the economic fronts have returned to normal from a near-standstill, revenue officials say.
According to the NBR, the government could collect Tk1,51,472 crore in revenue during the July-February period this year against a target of Tk1,96,147 crore.
Of this, Tk58,314 crore was collected in the VAT sector against a target of Tk77,323 crore.
Even then, the NBR officials view the 4.05% growth in overall revenue collection during July-February period this year compared to the same period of last year in a positive light. The average growth of revenue collection in the last five years is 10.20%.
Pointing out that the novel coronavirus has had a major negative impact on economic activities and led to a decline in imports and exports, NBR Chairman Abu Hena Md Rahmatul Muneem, however, told reporters that officials at all levels were working to achieve the target through automation.
He added that the country's customs services had not been closed for a single day during the pandemic and that they provided services amid emergency situations.
NBR still hopeful
The NBR has taken several initiatives in the VAT sector targeting automation. It is also awarding 101 people through the lottery every month for paying VAT through EFDs.
NBR officials said people's income losses amid the coronavirus pandemic had resulted in reduced consumption in the domestic market.
Compared to the same period last year, revenues in large sectors, including cigarettes and cars have come down, they mentioned, adding that imports of capital machinery had also declined.
Consequently, the target was not met in the VAT sector, they stated.
The revenue board, however, is hopeful about meeting the VAT target after witnessing a steady increase in revenue collection in the sector over the last several months.
After the negative trend started at the beginning of the coronavirus outbreak, the NBR gradually recovered and returned to a positive trend in VAT collection last December.
Imports-exports, income tax reasonably good
As opposed to a paltry 0.39% year-on-year growth in the VAT sector in the first eight months of the fiscal, the NBR saw a 7.72% growth in revenue collection from customs duty levied on goods at the import-export level.
Customs officials said a lot of shipments of previously placed orders had entered the country in the past few months.
Imports of several products, including cement clinker and steel products, had increased through Chattogram port, they added.
The income tax sector has also been growing along with customs. During July-February this year, there was a 5.28% growth in income tax collected from individuals and companies.
Officials said the NBR had received income tax from personal returns as it was obligatory to file income tax returns for fiscal year FY21 by December.
Moreover, as 85% of total income tax is deducted at source, the NBR had received revenue in this sector without going to the field level, they observed.
Income tax of salaried officials and traders is deducted at the source of income through banking channels.
Economists said lower imports and lower consumption of luxury goods due to the economic fragility induced by the pandemic had led to lower VAT collection.
However, at the same time, there has been some success in customs due to the import of machinery for government projects and the release of shipments of previous orders.
Ahsan H Mansur, executive director of the Policy Research Institute, said many essential products had not been imported since the beginning of the year, as the global trade was pretty much stagnant for several months.
"As a result, imports have increased slightly over the last few months. On the other hand, revenue collection also increased as there was an obligation to file tax returns at the end of the financial year. However, at this moment, it cannot be said clearly whether this growth will be sustainable or not."