March revenue sees 10% YoY growth, highest in first 9 months of FY25

The National Board of Revenue (NBR) recorded a 10% year-on-year growth in revenue collection this March, the highest for any single month in the first nine months of the current fiscal year (FY2024–25). 

However, the nine-month collection fell short of the target by around Tk66,000 crore, according to NBR sources. Preliminary NBR estimates show total revenue collection for July–March of FY2024–25 stood at Tk2,56,487 crore, against a target of Tk3,22,252 crore.

Officials from relevant NBR departments said that after a slowdown caused by the July–August mass uprising, revenue collection has been on a steady upward trend since December last year.

Despite this recovery, cumulative revenue growth for the July–March period remained below 3%, a sharp drop from the over 15% year-on-year growth seen in the same period of FY2023–24.

A senior NBR official, on condition of anonymity, told TBS, "The NBR has been given an unusually high revenue target. Besides, the political situation following the student-led mass uprising early in the fiscal year, along with trade disruptions, negatively impacted revenue collection."

"The large shortfall is mainly due to two reasons: an unrealistic target and the disruption to business caused by the political turmoil," he added.

However, he noted that the interim government's renewed focus and recent NBR policy measures have helped boost collections since December, culminating in March's good growth.

Economists, while acknowledging the recent improvement, continue to attribute the shortfall primarily to an overly ambitious revenue target.

Recently, the Centre for Policy Dialogue (CPD) projected that the total revenue shortfall — including both NBR and non-NBR sources — could reach Tk105,000 crore compared to the original target.

Towfiqul Islam Khan, research director at CPD, told TBS, "By the end of the fiscal year, the shortfall may reach Tk1,10,000 crore compared to the initial target. On a positive note, the revenue growth rate has been rising in recent months, and income tax collection, in particular, has shown encouraging results."

Notably, the original revenue target of Tk4,80,000 crore for FY2024–25 was about 26% higher than the actual collection of the previous fiscal year. Considering the shortfall, the target was revised down to Tk4,63,500 crore in the last December.

Meanwhile, the growth achieved so far remains far below the expectations set by the International Monetary Fund (IMF), which continues to push for stronger revenue performance.

Towfiqul Islam Khan emphasised that the government must minimise the gap between target and actual collection by curbing tax evasion. He also stressed the importance of fast-tracking automation initiatives and setting more realistic targets.

In a high-level government meeting last week, a preliminary decision was made to set the NBR's revenue target for the next fiscal year (FY26) at Tk4,99,000 crore. 

Although this may appear modest compared to the current fiscal year's original target, a significant shortfall this year would make the new target substantially higher in practical terms.

According to NBR sources, in March, the year-on-year income tax growth rate was approximately 15%, while the growth in import tax was below 13%. However, the value-added tax (VAT) growth rate was barely over 1%.