By Mehtab Haider
ISLAMABAD: Multiple factors are behind decline in growth on collection of General Sales Tax (GST) at domestic stage and one of the biggest stumbling blocks in the way is lack of integration of import data within the ambit of FBR between Customs authorities and Inland Revenue Service (IRS).
This lack of integrated data keeps IRS blind to imports brought by major entities in the country so they cannot focus on raising GST collection at domestic stage. When contacted FBR's spokesperson Dr Iqbal on Thursday said that there was no problem if IRS wants to get access to import data. The IRS high ups can get access if they require any information.
When asked about reasons for declined GST collection, he said that the reduced Oil prices in international market, withdrawal of GST on five export-oriented sectors and scaling down GST rate on fertilizer resulted into reduced collection.
When asked why no audit was done at import stage related to GST like other withholding agents, he said that the FBR could do it as no one barred us from selecting them for audit purposes. To another query regarding opting of most of officers from Customs instead of IRS, he said that enforcement staff joined both groups so it was not correct that they had only joined Customs group.
However, when the Large Scale Manufacturing (LSM) is showing impressive growth in accordance with official data released by Pakistan Bureau of Statistics (PBS), there is no justification for achieving a negative growth of GST on domestic front.
The FBRís own data is clearly showing an interesting picture as on one side, the tax collection machinery has achieved an impressive growth of 22.4 percent in shape of Customs Duty (CD) during first six months (July-Dec) period of the current fiscal, but at the same time, the GST collection on import stage witnessed dismally low growth of only 5.3 percent but simultaneously it declined to negative 6.6 percent at domestic stage during the same period of the ongoing financial year 2016-17.
ďIt clearly establishes that massive tax evasion is going on uninterrupted on account of GST at domestic stage but IRS has yet to launch an aggressive onslaught against biggest tax evaders and under filers because they donít have access to the import data cleared by the Customs authorities at import stage. It indicates that one hand of FBR does not know what second hand is doing because there is no integration of data between Customs and IRS,Ē one top official disclosed while talking to The News here on Wednesday.
The FBR has recently reconciled its data with AGPR to identify discrepancies then why two different taxes within the ambit of the FBR cannot integrate their software data for utilising each otherís information for materialising enhanced tax collection.
It is argued by top guns at the FBR that the declined oil prices in international market, reduction in GST rate on fertiliser and recent export package has caused over Rs100 to 150 billion losses to the national exchequer. This argument is partially correct but there is something more that needs to be analysed seriously.
For instance, the Regional Taxpayers Office (RTO) Rawalpindi has achieved growth in GST at domestic stage in the range of 22 to 29 percent during the last six months despite the fact that no big industry/unit lies within its jurisdiction. If one RTO without jurisdiction of big industrial unit has been managing impressive growth on account of GST collection at domestic stage then why Karachi, Lahore, Faisalabad and others could not reverse this trend of negative growth into positive one, still remains an unanswered question.
Another factor behind decline in GST collection is inability of the IRS to undertake audit at import stage. There is concept of holding audit of withholding (WHT) agents but when GST at import stage is showing dismally low growth the FBR remains unwilling to hold audit for ascertaining reasons behind low collection.
Third major reason is related to administrative issue being faced by the FBR. When the IRS came into being during the tenure of the PPP led regime at that time almost 95 percent staff working at enforcement level including Inspectors, Superintendents and their senior staff had preferred to join Customs group instead of IRS so this newly established group for having responsibility to deal three major taxes including Income Tax, GST and FED were not fully prepared or capable to meet the challenging tasks.
The FBR has collected Rs1,692 billion in first six months of the current fiscal year, witnessing shortfall to the tune of Rs150 billion and it may go up to Rs300 billion if loopholes such as on front of GST were not plugged without wasting anytime.
With declined growth in shape of GST both at domestic and imports as well as Federal Excise Duty (FED) at imports has caused major revenue loss to the FBR and now tax machinery will have to undertake gigantic task for collecting Rs1,912 billion in remaining five months (Feb-June) for displaying envisaged target of Rs3,604 billion on June 30, 2017.