Revenue grows 15% in FY24, still Tk27,000cr short of revised target

The National Board of Revenue (NBR) collected a little over Tk3.82 lakh crore in the fiscal 2023-24, marking an over 15% year-on-year increase.

Officials consider the revenue collection satisfactory despite falling short of the revised target by about Tk27,000 crore and the original target by Tk47,000 crore.

A senior NBR official told The Business Standard on condition of anonymity, "Last year, imports were low due to various reasons. On the other hand, there was some slowdown in the economy. Still, this growth is satisfactory."

As the reason for this, he said, "The efforts taken by the NBR to reduce tax leakage have yielded good results."

The revenue official also mentioned that the increase in tax rates in some areas contributed to this growth.

However, economists attribute this growth to runaway inflation.

Towfiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue (CPD), told TBS, "Due to high inflation in the country, commodity prices have increased, which has led to a 15% increase in revenue collection. Additionally, the new Income Tax Act has helped to raise revenue collection slightly."

"However, despite this, the NBR's realisation is about Tk50,000 crore less than the initial target," he said, adding that this shortfall had already been predicted by the CPD – an independent think tank.

This shortfall will affect the calculation of the target set by the government for the new financial year, the economist said.

The government has set a revenue collection target of Tk4.8 lakh crore for the fiscal 2024-25.

The revised estimate for the previous financial year was Tk4.1 lakh crore.

Accordingly, the revenue growth target for the current fiscal year is 17%. However, due to the Tk27,000 crore shortfall in revenue collection in the last fiscal year, this target will effectively increase to 26%.

Towfiqul Islam Khan believes even this target will not be achievable. "Setting large revenue targets every year and failing to meet them creates a lack of credibility in fiscal policy," he said.

The economist added that while the pace of revenue collection is low in the current financial year, expenditures also need to be adjusted.

According to NBR sources, the highest growth in FY24 was in value-added tax (VAT) collection, which increased by 20% compared to the previous financial year, amounting to over Tk1.5 lakh crore.

Income tax collection was Tk1,31,000 crore, registering a 15.6% growth, while import tax collection grew by 8.72% to reach Tk100,819 crore.

The main reason for the lower growth in import tax collection during this period is the decrease in imports.

According to data from the Bangladesh Bank, imports fell by around 13% in the first nine months (July-March) of FY24.