Revenue collection falls short by Tk15,000cr in Jul-Aug

The National Board of Revenue (NBR) has fallen short of its revenue collection target for the first two months of the current fiscal year by Tk15,000 crore, which experts attribute to anti-government protests, curfews, public holidays, and resulting business uncertainties.

The National Board of Revenue (NBR) failed to meet its revenue collection target. The target for customs and tax collection for the July-August period of the ongoing fiscal 2024-25 was set at Tk57,175 crore, but the revenue board collected Tk42,106 crore, according to NBR sources. During the same period a year ago, the revenue board collected Tk47,562 crore.

Sources further said that revenue collection targets were not met in any of the three key sectors – import, VAT (Value Added Tax), and income tax – over the past two months.

The income tax sector experienced the largest shortfall, collecting Tk11,593 crore against a target of Tk18,635 crore, resulting in a Tk7,041 crore deficit.

Meanwhile, the import sector fell short by Tk2,905 crore, collecting Tk14,485 crore against a target of Tk17,390 crore. The VAT sector collected Tk16,028 crore against a target of Tk21,151 crore, leading to a Tk5,122 crore shortfall.

At a recent event, NBR Chairman Abdur Rahman Khan addressed customs and tax officials, stating that this year’s revenue collection target will not be reduced. He emphasised that NBR must work towards achieving the full-year target of Tk480,000 crore in customs and tax revenue. Officials believe that revenue collection will gain momentum towards the end of the year.

During a meeting with NBR officials on Thursday, representatives of the International Monetary Fund (IMF) expressed dissatisfaction over the current revenue collection situation.

In FY24, revenue collection fell short by Tk27,500 crore, which also raised concerns within the IMF.

The IMF recommended that the NBR develop a new plan to improve revenue collection. In response, NBR officials pointed to the country's recent economic condition and political uncertainty, requesting the IMF to consider lowering the revenue collection target for the current fiscal year.

Bangladesh sought a loan from the IMF in July 2022 to stabilise the country’s financial sector. On 30 January 2023, the IMF approved a $4.7 billion loan, to be disbursed in seven instalments over three and a half years, with the final instalment set for 2026. So far, three instalments have been received.

The revenue sector was a key part of the IMF’s conditions. Two major conditions include collecting additional revenue equivalent to 1.5% of GDP each year and withdrawing all tax exemptions by 2027. The NBR must also devise a strategy to increase revenue collection by December 2024, as per the IMF’s advice.