The National Board of Revenue (NBR) missed its income tax collection target by Tk19,763 crore in the last fiscal year of 2022-23.
The income tax collection target for the current financial year was set at Tk122,000 crore, but only Tk102,000 crore was collected, according to NBR data.
Revenue board insiders said this shortfall is due to lingering effects of the Covid-19 pandemic, which hindered many businesses from reaching pre-pandemic operational levels.
Statistical analysis shows that until May, the income tax collected amounted to Tk88,959 crore, leaving a whopping Tk33,141 crore to be collected to meet the target.
However, in June, tax officials managed to collect only Tk23,961 crore.
Looking ahead, NBR officials are now focusing on increasing revenue collection in FY24.
They underscored the importance of achieving tax targets, as the noted failure could lead to jeopardizing the receipt of the next tranche of the International Monetary Fund (IMF) loan.
As part of the recommendations for granting a $4.7 billion loan package to Bangladesh, the IMF has asked for information how NBR is planning on streamlining tax collection.
According to sources, the IMF has prescribed a Tk137,000 crore income tax target in FY24.
NBR has presented a plan to achieve this goal, considering the 14.11% average income tax growth in previous years, except during the pandemic in 2020.
If a similar growth rate is achieved, the revenue would amount to around Tk113,000 crore.
NBR has devised additional measures to collect the remaining Tk5,547 crore.
The plan outlines collecting Tk3,000 crore through land registration, Tk500 crore from tourism sector, Tk300 crore from the tobacco sector, Tk150 crore from environmental surcharges and Tk250 crore by expanding the scope of taxes.
Besides, NBR aims to gradually increase tax collection through measures such as reducing exemptions, increasing tax rates, implementing the Coronet and Document Verification System (DVS) and digitizing the NBR.
To improve the tax-GDP ratio, economists say the government must collect an additional tax equivalent to 10.5% of the gross domestic product (GDP) from the next financial year onwards.
The tax-GDP ratio should be raised to 0.5% of GDP in FY24 and FY25 and further increased to 0.7% in FY26.
