NBR needs Tk 458.53b monthly haul to meet FY24 target

After a Tk 182.21 billion shortfall in domestic revenue mobilisation by February this year, the revenue authority now needs to collect Tk 458.53 billion in each of the remaining four months of the current fiscal year to achieve its target.

On a positive note, the revenue collection shortfall has begun to decline thanks to the tax authority's improved performance. Still, economists say meeting the full-year revenue collection target is unlikely.

According to the National Board of Revenue (NBR) provisional data, the authority collected Tk 2.26 trillion in tax revenue -- falling short of its Tk 2.44 trillion target.

The NBR has collected 55.26 per cent of its revised revenue collection target in the first eight months of the current fiscal year.

Despite this, the revenue board's collection grew by nearly 16 per cent in the July-February period of FY24 compared to the same period last year.

This higher-than-average tax revenue collection growth of 10.81 per cent has raised hopes among officials that they can reach close to their revised target of Tk 4.1 trillion by year-end. The original target for tax revenue collection was Tk 4.30 trillion.

Of the NBR's three wings, income tax collection grew the sharpest -- at nearly 20 per cent -- followed by value-added tax (VAT) at 16.10 per cent and import taxes at nearly 11 per cent.

Economists view the upward trend in revenue collection as a positive sign for the economy's ability to face macroeconomic stress.

Tax revenue collection growth until February suggests a lower shortfall compared to the previous year, according to Dr Ahsan H Mansur, executive director of the Policy Research Institute (PRI) of Bangladesh.

He, however, estimates that tax revenue will reach Tk 3.90 trillion by year-end, falling short of the Tk 4.1 trillion target.

The economist pointed to several economic indicators, such as exports, remittances and the recent improvement in the dollar situation, as signs of a nominal increase in people's income levels.

Some companies have also made windfall profits from selling their stock products, which has further contributed to higher domestic revenue mobilisation, he added.

Economist and Senior Research Fellow at the Centre for Policy Dialogue (CPD) Towfiqul Islam Khan largely credited the new Income Tax Law-2024 for the high growth in income tax collection.

Mr Khan, who is also the Coordinator of CPD's Independent Review of Bangladesh's Development (IRBD) programme, said, "The new law has widened the tax net by including new avenues, increasing the scope for tax collection."

He acknowledged the shortfall but maintained that revenue collection growth is on the right track, considering the ambitious targets set each year.

"In general, tax revenue collection should grow by around 14 per cent to account for inflation and GDP growth," Mr Khan added.

However, he believes meeting the full-year revenue collection target is unlikely under normal circumstances.

For the July-February period, the NBR collected Tk 723.11 billion in income tax and travel tax, Tk 887.01 billion in VAT and Tk 655.73 billion in import and export taxes.

During this period, the Customs Wing fell short of its target by Tk 77.11 billion, followed by the Income Tax Wing of Tk 68.43 billion and the VAT Wing of Tk 36.66 billion.

In FY23, the revenue collection target was Tk 3.70 trillion.

However, officials pointed out that tax revenue collection usually picks up in the last quarter of the fiscal year, coinciding with the pace of execution of the Annual Development Programme (ADP).

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