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The country's internal tax revenue collection grew by nearly 16 per cent (year-on-year) in the first quarter (Q1) of the current fiscal year despite posting a shortfall of Tk 40.74 billion against the target.
The National Board of Revenue (NBR) collected Tk 671.04 billion in tax revenue during the period of July-September against its target of Tk 711.78 billion, according to provisional data released Sunday.
Two wings of the NBR -- VAT and Customs -- achieved more than 16 per cent growth in revenue collection compared to the corresponding period of last year.
On the other hand, the income tax wing of the NBR achieved 13.82 per cent growth in the July-September period of the current FY.
However, all three wings of the NBR are lagging behind their targets in Q1.
Economists said fluctuation in exchange rates in conversion from US dollar to Bangladesh taka and the domestic inflation played a significant role in spurring the tax revenue collection in Q1.
The country's inflation surged to a record 9.5 per cent in August, the highest in 12 years, due to adverse effects of fuel price hikes, according to the Bangladesh Bureau of Statistics (BBS).
Dr Ahsan H Mansur, Executive Director of the Policy Research Institute of Bangladesh (PRI), said exchange rates of dollar helped collect 20 to 25 per cent higher taxes at import stages.
On the other hand, domestic VAT collection went up due to inflationary pressure on people as prices of most of the products went up, he added.
Higher growth in tax revenue collection in Q1 would help offset the economic pressure but it might slow down in the coming days, Dr Mansur predicted.
An economic slowdown was due in coming months that might hit construction and other sectors eroding the purchasing power of people, he said.
He, however, said the revenue collection target for NBR was modest this year compared to the previous years' ambitious target.
Still, there might be a nominal shortfall in revenue collection against the target by the year-end, he added.
In the FY 2022-23, the government set a Tk 3.70 trillion target for NBR, expecting 12.12 per cent growth over the previous FY target which was Tk 3.30 trillion.
The NBR's research and statistics wing recorded 12.12 per cent growth on average in the last five years.
The Value Added Tax (VAT) wing collected Tk 245.46 billion in revenue, followed by import and export fetching Tk 224.54 billion and income tax and travel tax Tk 201.02 billion in the first quarter of the current fiscal year.
To achieve the target for the current FY, the NBR would have to collect Tk 925 billion in each of the quarters until June 30, 2023.
A senior tax official said current year's fiscal measure helped boost tax revenue collection as the government scrapped tax exemption facilities for some of the key areas.
He said income tax collection, both from individuals and corporates, would go up this year due to the mandatory rule that requires the proof of submission of tax-return (PSR) and the Document Verification System (DVS)-authenticated financial statements.
The government set a Tk 1.11 trillion target for import and export duty collection while a Tk 1.36 trillion target for VAT collection and a Tk 1.22 trillion target for income and travel tax collection.