Tax collection falls Tk 10,784cr short of target in July-Aug

Staff Correspondent | Published at 09:41pm on September 27, 2020

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A file photo shows the National Board of Revenue headquarters in the capital.  Revenue collection by the National Board of Revenue fell Tk 10,784 crore short of target in July-August of the current fiscal year 2020-2021.— New Age photo

Revenue collection by the National Board of Revenue fell Tk 10,784 crore short of target in July-August of the current fiscal year 2020-2021 due mainly to an adverse impact on economy of the coronavirus outbreak.

The revenue mobilisation, however, entered into the positive zone with a 0.16-per cent growth in the two months, riding on growth in August after a massive decline in the previous month.

In August, the overall revenue collection grew by 7.85 per cent year-on-year while the NBR witnessed a-6.77 per cent negative growth in July.

Revenue collection grew by 5.07 per cent in the first two months of the last fiscal year (FY 2019-20).

According to the NBR provisional data, tax officials managed to collect Tk 30,163 crore in July-August of FY21 against the target of Tk 40,947 crore set for the period.

The collection amount in the period is only 9.14 per cent of the full-year target of Tk 3.30 lakh crore, the data showed.

Only the customs wing managed to post a positive growth at 4.55 per cent in the period while both value-added tax and income tax wings experienced a negative growth at 2.41 per cent and 1.18 per cent respectively.

In the same period of FY20, income tax grew by 13.32 per cent followed by VAT collection by 4.92 per cent and customs duty by negative 1.45 per cent.

All the three wings, however, lagged behind in achieving their respective targets for July-August as economic activities are yet to get momentum after devastating impacts of the shutdown the government imposed to check the COVID-19 outbreak, NBR officials said.

The shortfall in collection stood at Tk 5,454 crore in customs duty, Tk 4,113 crore in VAT and Tk 1,218 crore in income tax in July-August of FY21.

Setting excessively high target for the period aligned with the ambitious 48 per cent annual growth target is also another reason for the shortfall, they said.

The government for FY21 has set the annual revenue collection target at Tk 3.30 lakh crore, up Tk 1,06,538 crore on the actual collection of Tk 2,23,462 crore in FY20.

Revenue collection on average grew by 10.20 per cent in the last five fiscal years while growth contracted by 2.26 per cent in FY20 due to the coronavirus-induced slowdown in economic activities.

The NBR data showed that VAT collection stood at Tk 11,352 crore followed by customs duty Tk 10,009 crore and income tax Tk 8,803 crore in the period.

The targets for the VAT, customs and income tax wings were Tk 15,465 crore, Tk 15,463 crore and Tk 10,020 crore respectively for the first two months of this fiscal year.

The tax authorities hoped that revenue collection would gain pace in the coming months as the economy was going to be completely normal unless there was no second wave of the infection as feared by the authorities concerned.

The NBR may see a positive outcome in VAT collection due to introduction of electronic fiscal devices (EFD) at shops to curb the scope for VAT evasion.

Revenue collection usually remains slower in the first few months of a fiscal year and gradually gains pace in the second half of the fiscal year.

The government has set the collection target at Tk 1,28,873 crore for VAT wing, Tk 1,05,475 crore for income tax wing and Tk 95,652 crore for customs wing for FY21.