NBR's revenue growth gains momentum amid economic recovery

With the economy showing signs of gradual recovery, the National Board of Revenue (NBR) has started to see positive results in revenue collection.

According to sources related to NBR, revenue collection saw the highest growth in January among the first seven months of the 2024-25 fiscal year, with a 7% increase. The previous month had also witnessed nearly 7% growth. 

This marked the second consecutive month of positive growth after November's decline, bringing the total number of months with growth to four this fiscal.

Earlier, the months of September and October also witnessed growth but the growth rates were not significant. Overall, from July to January, revenue collection increased by nearly 3% compared to the same period in the previous fiscal.

Economists believe that the slowdown in business activities that came about after the student-led uprising in July-August and the subsequent political situation is gradually easing, leading to improved revenue collection.

However, they cautioned that while revenue growth is continuing, it remains below normal economic levels. If political instability intensifies in the coming months, sustaining the current growth rate may be challenging, they added.

Despite the 7% growth in January, according to NBR sources, the revenue collection for the first seven months was still 21% below the target, amounting to a shortfall of about Tk50,000 crore. 

Ali Ahmed, former NBR member, told The Business Standard, "The economy is showing signs of improvement after the stagnation caused by the student-led uprising and subsequent events at the beginning of the fiscal year.

"Imports are increasing, and local businesses are also gaining some momentum compared to before. This positive shift has had a favourable impact on revenue," he added.

Former NBR member Farid Uddin also echoed this view. He said "If the law and order situation improves and political instability decreases, this growth is likely to increase further in the coming months."

Talking to TBS on the matter, Towfiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue (CPD), noted that, in addition to economic recovery, the increase in VAT on certain goods and services in January also contributed to higher revenue collection. 

He added that revenue growth could exceed 10% by the end of the fiscal year.

However, he pointed out that the current growth rate remains lower than last year's figures and still lags behind the inflation rate.

"If the nominal GDP growth rate reaches 12% by the end of the year, but revenue growth remains lower, the tax-to-GDP ratio will decline further," he warned, emphasising the need for NBR to enhance collection efforts.

Muhammad Abdul Mazid, former NBR chairman, echoed a similar view, stressing the importance of boosting revenue collection.

"Usually, during a caretaker government, there are fewer external pressures, allowing more opportunities to boost revenue collection. In this regard, NBR is falling behind," he remarked, calling for more efficiency among field officers to improve collection.

According to NBR data, in January, the revenue target was Tk35,425 crore, while actual collection stood at Tk33,107 crore. Over the first seven months of the fiscal year, against a target of Tk2,46,916 crore, revenue collection amounted to Tk1,95,860 crore.

NBR collects revenue from three major sources – import tax, value-added tax (VAT), and income tax. 

As per NBR data, in January, VAT collection saw the highest growth at 12%, surpassing the target by 3%. Income tax collection grew by 8%, while import tax revenue declined by 1%.

Over the seven-month period (July–January), revenue collection from import tax, VAT, and income tax increased by 1%, 4%, and 3%, respectively.