\

University of Education
Lahore, Multan
Department of Economics and Business Administration

Internship Report

REGINAL TAX OFFICE FEDERAL BOARD OF REVENUE

MULTAN

A REPORT SUBMITTED TO THE DIVISON OF MANAGEMENT AND ADMINISTRATIVE

SCIENCE, UNIVERSITY OF EDUCATION, LAHORE IN THE PARTIAL FULFILLMENT OF
THE REQUIREMENTS FOR THE DEGREE OF BACHELOR OF BUSINESS ADMINISTRATION
(HONS)

Submitted By:
<<Bsf2005033>>
<<Natasha Farooq>>
<< Session>>
<<2020-2024>>
\

University of Education Multan Campus, Lahore

Department of Economics and Business Administration

LETTER OF UNDERTAKING

This internship report was submitted by <<Natasha Farooq >> D/o.<<M.Farooq Ahmad>>

Roll No. << Bsf2005033 >>for the partial fulfillment of the requirements for the degree of

BBA

Session (2020-2024)

With specialization in
Finance
And is hereby accepted by the evaluation committee.

Internship Supervisor

HOD / Coordinator

External Examiner

Principal
\
 Acknowledgement
I have taken efforts in this project. However, it would not have been possible without the kind
support and help of many individuals and organizations. I would like to extend my sincere
thanks to all of them.
I am highly indebted to my all Teachers for their guidance as well as for providing necessary
information regarding the project & also for their support in completing the project.
I would like to express my gratitude towards my Supervisor Mrs. Samaviya Munir for their
kind co-operation and encouragement which help me in completion of this project.
I would like to express my special gratitude and thanks to industry persons for giving me such
attention and time.
My thanks and appreciations also go to my colleague in developing the project and people
who have willingly helped me out with their abilities.

4
 Dedication

At first dedicating this work to Allah Almighty without his sympathy and mercy I was not

able to accomplish this work. Allah give me power and confidence to do this internship and

also Holy Prophet Muhammad (peace be upon him) who is a light for humanity. I also

dedicated this work to my lovely parents whom I love from core of my heart.

5
 Executive Summary

A six-week internship program is crucial for BBA students since it allows them to improve their
practical knowledge and abilities. I learned many practical business skills throughout my internship
and received excellent job training. This report often relates to FBR operation and performance and
provides a brief history as well as an overview of the tasks, I completed and the lessons I learned
during my internship. There are four chapters in my report.
The first chapter provides an overview of FBR, including its history, founding, and several phases of
development.
In the same chapter, products and services are also highlighted. The firm profile, including the
current chairman and board, is further explained in this chapter. I've also talked about the several
FBR departments. The FBR ratio analysis and SWOT analysis are covered in the second chapter.

6
 Table of Contents

1. Introduction .............................................................................................................. 1
2. Overview of the Organization .................................................................................. 2
2.1 History ................................................................................................................... 2
2.2 Mission statement .................................................................................................. 2
2.4 Objective of FBR................................................................................................... 3
2.5 Policy of the Organization..................................................................................... 3
2.6 FBR Competitors................................................................................................... 5
3.1 Number of employees ........................................................................................... 7
3.2 Main Offices .......................................................................................................... 7
3.3 Brief Introduction of all departments of FBR: ...................................................... 7
3.4 Comments on the organizational structure: ........................................................... 9
Plan of your internship program: ................................................................................... 9
A brief introduction of the branch/area office of the organization where I did
Internship: ....................................................................................................................... 9
4.1 Starting and ending dates .................................................................................... 10
4.2 Name of the ......................................................................................................... 10
4. Training Program: .................................................................................................. 11
5.1 FUNCTION OF FBR: ......................................................................................... 11
5.2 PRACTICAL WORK .......................................................................................... 12
5. FINANCIALANALYSIS ...................................................................................... 18
Ratio Analysis:.............................................................................................................. 18
Comparison of Net Revenue Collection during First Half of FY 2023-24 vs FY 2022-
23 .................................................................................................................................. 19
6. SWOT ANALYSIS ................................................................................................ 21
7. CONCLUSION ...................................................................................................... 22
8. RECOMMENDATION: ........................................................................................ 23
9. References .............................................................................................................. 24

7
 1. Introduction
Formerly known as the Central Board of Revenue (CBR), the Federal Board of Revenue
(FBR) is Pakistan's federal law enforcement organization that looks into tax offenses,
suspicious wealth buildup, money laundering, and tax collecting regulations. Inspectors-IR,
who monitors tax evaders, determines taxable incomes, and carry out specific duties for FBR
Headquarters, is the backbone of the FBR operation.
The FBR is responsible for collecting taxes from all citizens and enterprises in the nation. The
Governmental Board of Revenue (FBR) is a federal agency. successfully finished a 6-week
internship at the FBR Regional Tax Office in Multan. During my internship, I got the chance
to work in many departments such as Audit, Enforcement, and Human Resources and learn
about various types of taxes, with holding, and appeal procedures. There are several issues
with Pakistan's taxation system, including massive exemptions, a low tax GDP ratio, a low
percentage of direct taxes in efficient auditing, a big tax gap, and a penalty system, among
others.
The FBR is working to improve auditing, and new taxation technologies are also being
deployed. This needs to be addressed in order to increase tax collection and decrease
collection costs in order to raise revenues. Since regional tax offices are another name for
inland revenues, the FBR has divided up his offices geographically. To reduce over taxation,
NTNs (national tax numbers) are also being used. Additionally, the FBR uses two software
packages for sales tax and withholding tax in order to save time and improve efficiency.
The State of Pakistan's principal stakeholders are its citizens. Tax money from the general
public powers the State. As a result, every Pakistani citizen has a right to information
regarding the performance, goals, accomplishments, shortcomings, and future plans of the
company they entrust with their taxes. However, the Pakistani government is making
significant investments to raise the efficiency and effectiveness of FBR. The goal is to make
FBR an entity that can, through efficient tax collection, help the government reach its goal of
self-reliance. The World Bank-backed Pakistan Raises Revenue (PRR) Program (2019–24)
aims to transform the FBR by leveraging awareness and technology to win over taxpayers.
The transparency criterion of the PRR Program, which requires the systematic measurement
and public reporting of the program's performance delivery against approved Key
Performance Indicators (KPIs), is satisfied by the report. These comprehensive KPIs, created
in partnership with the World Bank, encompass almost all facets of FBR's operations. The
KPIs address several different subjects, such as revenue collection, tax education, and

1
transparency in FBR operations and controls. The FBR is in charge of setting and enforcing
fiscal policies, assessing and collecting federal taxes, and handling appeals, which is a quasi-
judicial duty.

1. Overview of the Organization

2.1 History

The Federal Board of Revenue (FBR), formerly the Central Board of Revenue (CBR), is a federal law
enforcement agency in Pakistan that looks into money laundering, tax evasion, and the accumulation of illicit
riches. By virtue of the Central Board of Revenue Act, 1924, the Central Board of Revenue (CBR) was
founded in April of that year. In 1944, the Ministry of Finance created a fully functional Revenue Division.
This arrangement persisted until August 31, 1960, following independence. When, in accordance with the
Administrative Reorganization Committee's recommendations, the FBR was established as a related Ministry
of Finance agency. In 1961, FBR formed a "Income Tax Committee" to oversee the taxation procedure. An
assessment officer was in charge of figuring out a person's income and tax obligation before 1965. In 1974,
more changes were made to streamline the organization and its responsibilities. Consequently, the ex-officio
Chairman FBR position was created. On October 22, 1991, FBR's position as a Revenue Division was
reinstated under the Ministry of Finance in order to remove obstacles to the Secretary of Government's ability
to execute administrative responsibilities and to formulate and implement fiscal policy measures effectively.
First presented was the "Self-Assessment Scheme." Up to 1979, the Act of 1922 underwent a number of
revisions. Because of those modifications, continuing to work becomes difficult and complex. The
government created a new income tax law known as the "Income Tax Ordinance 1979". Additionally, this Act
incorporates all of the core concepts from earlier Acts, guaranteeing that the benefits of the legislation that has
been produced over the preceding 57 years are not negated.
The Income Ordinance of 1979 included a number of schemes designed to allow black money holders to
convert their black money into white money. But in January 1995, the Revenue Division was eliminated, and
FBR returned to its pre-1991 state. The Revenue Division has been in operation since December 1st, 1998.

2.2 Mission statement

Enhance the capability of the tax system to collect due taxes through application of modern
techniques, providing taxpayer assistance and by creating a motivated, satisfied dedicated and
professional workforce creating a motivated, satisfied, dedicated and professional workforce.

2.3 Vision statement

To be a modern, progressive, effective, autonomous and credible organization for optimizing

2
revenue by providing quality service and promoting compliance with tax and related laws.

VALUES:
▪ Integrity
▪ Professionalism
▪ Teamwork
▪ Courtesy
▪ Fairness
▪ Transparency
▪ Responsiveness

2.4 Objective of FBR

The project's goal was to extend the tax base and fight tax evasion in order to help boost
domestic income in a sustainable way. FBR established several Taxpayers Education and
Facilitation Centers to increase voluntary compliance as well as Large Tax payer Units
(LTUs) and Regional Tax Offices (RTOs) to test the reorganized structure of income tax and
sales tax in order to fulfill the goals of the reforms.
• Overall increase in the revenue collection
• Increase in tax to GDP ratio
• Collection of optimum tax revenues
• Strengthening audit procedures
• Increase in transparency and integrity
• Improve effectiveness, responsiveness and efficiency
• Provide transparent and high quality tax services.

2.5 Policy of the Organization

The Federal Board of Revenue's tax policies promote the importance of tax payer facilitation
and the necessity of acceptance with return filing. FBR created the universal self-assessment
scheme, which assumes that all taxpayer declarations are truthful, in order to achieve these
goals. However, choosing taxpayers for audit becomes an important method in order to
guarantee tax law compliance, promote a tax-conscious society, and prevent the habit of

3
making a fraud reports with freedom.
Through the Finance Act 2022 (FA 2022), the Government had introduced concept of super tax on
high earning persons to be paid at the time of filing of tax return. Slab-wise rates were prescribed for
tax year 2022 with a maximum rate of 4%. With regard to certain specified sectors, an enhanced rate
of 10% was prescribed for tax year 2022 only and for banking companies, 10% super tax was to be
applicable for tax year 2023. The higher rate of 10% was applicable in both the cases only where
income exceeded Rs. 300 million.
Through FA 2023, the Government has introduced new slab rates for super tax for taxpayers having
income in excess of Rs 350 million. As a result, the highest slab rate of 10% will be applicable on
taxpayers of all sectors having income in excess of Rs 500 million.
The definition of ‘associates’ has significantly been widened to also include the following:
i. a person who sufficiently influences (either alone or together with an associate or associates),
the other person. It has been explained that for the purpose of this section, two persons shall
be treated as sufficiently influencing each other, where one or both persons, directly or
indirectly, are economically and financially dependent on each other and, decisions are made
in accordance with the directions, instructions or wishes of each other for common economic
goal; or
ii. a person who enters into a transaction, directly or indirectly, with another person who is a
resident of jurisdiction with zero taxation regime. The jurisdiction with zero taxation regime
shall be the one as may be prescribed. By virtue of the above amendments, the provisions
otherwise relating to transactions between associates, such as transfer pricing, may become
applicable.
iii. www.pwc.com/pk

4
2.6 FBR Competitors

The Federal Board of Revenue (FBR) in Pakistan does not have direct competitors, as it is a government
agency responsible for collecting taxes and duties. However, there are other organizations that contribute to
the country's economy and financial system, such as:
• Securities and Exchange Commission of Pakistan (SECP)
• State Bank of Pakistan
• Telecom companies like Mobilink
• http://www.similarweb.com

2.7 FBR Business volume

Federal Board of Revenue is an accelerated network of Tax collection offices throughout the country. It has
the authority to collect taxes from each and every person of the country who is liable to pay tax according to
Income Tax Ordinance2001.Collection of taxes is being increased day by day because new taxpayers are
being added in the tax net, and working of FBR has got better. They collect only tax and revenue for their
country.
During the month of December 2022 FBR collected Rs. 740 billion against Rs. 600 billion in December
2021 showing an impressive growth of more than 23%. The half yearly target for the July-December 2022
was achieved to the extent of 94.1 percent.
The annual target has been achieved 45.9 percent which is slightly lower than the five year average of half
yearly share of 46.7 percent. The direct taxes have been on the top with around 99 percent target
achievement, followed by sales tax 92.4 percent, FED 91.6 percent and customs duty around 86 percent.

FBR’s Strategic Intent:

FBR aims to be a smart and modern tax administration with unquestioned able integrity, trusted and
admired by Government, the public, as well as our international partners. FBR has identified
following strategic objectives, which form the corner stone of our 5-year Strategic Plans both for
Customs as well as for Inland Taxes:
• Ensure sustainable increase in domestic revenue by broadening the tax base
and facilitating compliance.
• Provide clarity and certainty about tax obligations.

5
• Increase the use of data to improve integrity, derive insight& improve outcomes.

• Modernize infrastructure, technology, and enhance automation for digitalized and

streamlined services.
• Facilitate legitimate trade and travel without compromising on customs controls
• Enhance fiscal controls, enforcement, and society protection capabilities

• Drive efficient use of resources to deliver quality out comes and performance excellence

• Make it hard &costly or tax payers and traders who do not comply

• Develop a high performing, diverse, and engaged workforce

• Work with stakeholders to modernize the tax administration system

• Build public trust and confidence in the tax administration system

• Annual Report ( 2022-2023) www.fbr.gov.com.pk

2. ORGANIZATIONSTRUCTURE

www.fbr.gov.com.pk
6
3.1 Number of employees

There are more than 200 plus employees working in regional tax office Multan. In which include, the
department of IT, HRM, admin, collection and enforcement, customs, legal, audit and BTB.

3.2 Main Offices

1. Chief Commissioner Large Taxpayers OfficeIslamabad

2. Chief Commissioner Large Taxpayers Office Lahore
3. Chief Commissioner Large Taxpayers OfficeKarachi
4. Chief Commissioner Corporate Tax Office Karachi
5. Chief Commissioner Regional Tax Office Islamabad
6. Chief Commissioner Regional Tax OfficeRawalpindi
7. Chief Commissioner Regional Tax Office-I, Karachi
8. Chief Commissioner Regional Tax Office-II,Karachi
9. Chief Commissioner Corporate Tax Office, Lahore
10. Chief Commissioner Regional Tax Office, Lahore
11. Chief Commissioner Regional Tax Office Multan
12. Chief Commissioner Regional Tax Office Faisalabad
13. Chief Commissioner Regional Tax Office Peshawar
14. Chief Commissioner Regional Tax Office Sukkur
15. Chief Commissioner Regional Tax Office Gujranwala

3.3 Brief Introduction of all departments of FBR:

The biggest tax-collection institution in Pakistan is called "FEDERAL BOARD OF REVENUE,"
and it has a well-established network all over the nation. FBR consists of following major
departments:

• Audit department
• legal Department

7
 • HRM Department
• Admin Department
• Collection and Enforcement Department
• Customs department

Audit department:
The function of audit department is to work on the defaulted files through internal and external auditing.
They have to find the difference between the tax payer income shown and which really exists, if any are
found the penalties and extra tax is charged.

Legal Department:
The legal wing/department does his function by reposing confidence in the tax payer community and
simultaneously implementing the tax laws fairly and squarely, the FBR is in the process of
achieving growth in revenues. Legal Wing of the FBR helps in implementation of the tax laws fairly and
squarely which in turn contributes to achieving growth in revenue.
The Legal Wing of FBR is to introduce reforms of reduction in litigation coupled with creating better
environment for taxpayers to discharge their obligation to the State.

HRM department:
HRM department works on how to increase the employee’s motivation. Al lissues of employees a resolved
by the HRM department i.e. vacations, code of conduct functioning of employees. Complete information of
a certain employees is recorded here.
Collection and enforcement department:

Collection and enforcement department function is how to collect the revenues and implementations taxes .

Customs department:
Customs department is responsible for implementing the custom duties on the entry and exit on the
boundaries of country. Custom duties are paid at the port stage and Levion important export. FBR is
focusing on the improvement of audit to increase revenues; new taxing technologies are also
introduced.FBR has distributed his offices on territorial base is naming as in land revenues are also called
regional tax offices. NTN (national tax number) are also focused to avoid excess taxing.
FBR is also using two software’s which are used for withholding tax and sales tax to save time and improve
efficiency.

8
3.4 Comments on the organizational structure:
I am highly thankful to the staff member of Federal Board of Revenue Regional Tax Office
Multan. Who really cooperated with me and provided me their complete guidance.

3. Plan of your internship program:

During the period of internship program I had the opportunity to work in the different areas like
• Audit,
• Enforcement,
• HRM
• all kind of taxes like as
o income tax
o sale tax
o Withholding tax.

A brief introduction of the branch/area office of the organization where I

did Internship:
The Federal Board of Revenue is the biggest tax collection agency in Pakistan, with an extensive network of
offices across the nation. It is one of the biggest organizations in Pakistan only because of a vast network
that includes the three largest tax pairs and eighteen regional tax offices.
Under the direction of Mr. Mukhtar Hussain Thaheem, Director of Human Resource Management, I
completed an internship at the Regional Tax Office in Multan. During our time there, we worked in six
different FBR departments. There are over 200 employees at FBR, and the workplace was quite different.
FBR consists of following major departments:

1. Audit department

2. legal Department

3. HRM Department

4. Admin Department

5. Collection and Enforcement Department

6. Customs department

The function of audit department is to work on the defaulted files through internal and external
9
auditing. They have to find the difference between the tax payer income shown and which really
exists, if any are found the penalties and extra tax is charged.
The legal wing/department does his function by reposing confidence in the taxpayer community And
simultaneously implementing the tax laws fairly and squarely, the FBR is in the process of achieving
growth in revenues. Legal Wing of the FBR helps in implementation of thetax lawsfairly and
squarely which in turn contributes to achieving growth in revenue.
The Legal Wing of FBR is to introduce reforms of reduction in litigation coupled with creating better
environment for taxpayers to discharge their obligation to the State.
HRM department works on how to increase the employee’s motivation. All issues of employees a
resolved by the HRM department i.e. vacations, code of conduct functioning of employees.
Complete information of a certain employees is recorded here.
Collection and enforcement department function is how to collect the revenues and implementations
taxes.

Customs department is responsible for implementing the custom duties on the entry and exit on the
boundaries of country. Custom duties are paid at the important port stage. FBR is focusing on the
improvement of audit to increase revenues; new taxing technologies are also introduced.FBR has
distributed his offices on territorial base is naming as in land revenues are also called regional tax
offices. NTN (national tax number) are also focused to avoid excess taxing.
FBR is also using two software’s which are used for withholding tax and sales tax to save time
and improve efficiency.

4.1 Starting and ending dates

I started the internship program from 08.05.2023 to 19.06.2023.

4.2 Name of the

The name of the following department in which I got training.
• Audit department
• legal Department
• HRM Department
• Admin Department
• Collection and Enforcement Department
• Customs department
The duration of my training was 6 weeks.
10
 4. Training Program:

The tax-to-GDP ratio in Pakistan is low and only certain population groups are actually paying taxes.
The Federal Board of Revenue (FBR) is responsible for the collection of both direct and
indirect federal taxes in Pakistan.
• The Direct taxes include Income Tax, Workers Welfare Fund, Workers Profit
Participation Fund and Capital Value Tax.
• The Income tax and other direct taxes are collected from corporations, association of
persons (AOPs), individuals through voluntary payments and on demand following
assessment. Withholding taxes are collected by various withholding agents.
• Indirect taxes collected by FBR include General Sales Tax (GST), Customs Duties and
Federal Excise Duty (FED).
• The bases for GST and Excise Duty are sales production of services and manufacturing
activities carried out in the country; whereas import related taxes like customs duty, sales
tax(import), FED(import), and Withholding Taxes(import), depend on the volume of
imports.
There is many important function or powers of Federal Board of Revenue (FBR), a top tax
collection agency.

5.1 FUNCTION OF FBR:

1. To implement tax administration reforms.

2. To promote voluntary tax compliance

3. To make the Board a service oriented organization,

4. To implement comprehensive policies and programs forth education and facilitation of

taxpayers, stakeholders and employees.
5. To implement current, efficient tax administration techniques, information technology systems,
and policies to reduce assessments, enhance workflows, arrange taxpayer registration, expand
the tax base, and enhance the effectiveness of departmental remedies, such as the enforcement of
duty, cost, or tax reduction or recovery according with currently implemented laws. To improve

11
 the productivity through a comprehensive and effective human resource strategy.
6. To identify and select through Internal Job Posting process the employees for designated
jobs.
7. To grant additional allowance or any other incentives to the employees and members of
the Board.
8. To take appropriate measure including internal control to combat corruption within the
organization.
9. Tore-designate posts, prepare jobs description and design KPI’s

10. To investigate financial crimes, money laundering, tax evasion tax avoidance.

11. To honor Pakistan international tax obligations.

5.2 PRACTICAL WORK

1st Week:
In the first of the internship we learn about;

1. The introduction of the federal board of revenue

2. Its two main domains which are Inland Revenue Service (IRS) and Customs.

IRS consists of Income tax, General sales tax, Withholding tax and Federal excise duty. While,
on the other hand, the main functions of customs are to monitor Import and Export and Anti-
Smuggling.
These two domains are further divided into wings and departments. We got to know about the
details of withholding tax which is deducted from the salary of government employees. Working
of Enforcement and Collection department.
There are two major edwings of FBR .These are:

• Inland Revenue
Inland Revenue refers to the government agency responsible for collecting taxes and duties on income,
goods, and services within a country. It is responsible for administering and enforcing tax laws and
regulations. Inland Revenue collects taxes on behalf of the government, which are used to fund public
goods and services. The agency also provides tax refunds and resolves tax disputes. Its main goal is to
ensure tax compliance and maximize revenue collection.

• Custom
12
 Custom refers to the government agency responsible for collecting duties, taxes, and other charges on
goods imported or exported through a country's borders. Customs agencies also enforce regulations and
laws related to trade, including:
• Collecting tariffs (taxes on imports)
• Enforcing trade restrictions and quotas
• Preventing smuggling and fraud
• Inspecting cargo and luggage
• Collecting statistics on trade flows
In Pakistan, the Customs wing of the Federal Board of Revenue (FBR) is responsible for these
functions.

2nd Week:
In second week we learn history of Federal Board of Revenue (FBR) and also knows
departments of (FBR) and also learn Functions of Federal Board of Revenue (FBR). Filler and
non-Filler, Active Taxpayer.

1. A person who had a registered NTN number also file return annually is filler

2. The one who is not filled return annually is Non-filler even though he have a registered
NTN number.

3. Active Taxpayer is the registered Entity Who Does Not Fall in the A person is blacklisted
(Whose Registration Is Suspended or Blocked). Fails to File the Return Fails to File the
Income Tax Return Forum of Appeal, If FBR find any fraud in data they can collect
information from Land revenue, Vehicle, Banks etc. That person or company has right to
appeal in different forum like Commissioner Appeal - Applet Tribunal – High Court –
Supreme Court – president etc.

Week3rd:

TYPES OF TAXES
• Income Tax
• Sale Tax
• Federal Excise Duty

13
INCOME TAX:

The term income tax refer to a type of tax that government imposed on income generated by
businesses and individuals within their jurisdiction. By law,tax payers must file anannual income
tax return to determine their tax liability.

TYPES OF INCOME TAX:

1. Individual Income Tax

o Personal income tax is another name for individual income tax.

o Individual salaries, wages, and other forms of income are subject to this kind of income tax.
States typically apply this kind of tax.

o Most people don't pay taxes on their total income because of deductions, credits, and
reductions.

o Taxpayers can lower their taxable income by utilizing a number of income tax deductions
and tax credits provided by the IRS.

2. Business Income Tax

o Businesses that make money also have to pay income tax.

o Corporations, partnerships, self-employed contractors, and small enterprises all pay taxes to the
IRS.

o The corporation, its owners, or shareholders can show their business profits and then lower their
operational and capital costs, depending on the specifics of the business structure.

o Their taxable business income is typically defined as the difference between their business
income and their capital and operational expenses.

SALETAX:
A sale tax is a tax that is paid to government for sale of certain goods and services. The rules
usually allow the seller to collect tax funds from consumers at the point of purchase. When tax
on goods and services is paid to governing body directly by consumers, it generally called a
14
utilization tax. Most laws exempt certain goods or services are related to sale tax.

TYPES OF SALE TAX

• Manufacturer Sales Tax

- The sale of tangible personal property by manufacturers and producers.

- It is a type of indirect tax paid by the manufacturer to the government, and is typically passed on to
the consumer as part of the final purchase price.

• Wholesale Sales Tax

- Wholesale tax is a type of indirect tax levied on the sale of goods in large quantities, typically from a
manufacturer or distributor to a retailer
- It is paid by the wholesaler to the government, and then passed on to the consumer as part of the final
purchase price.

• Retail SalesTax

- Tax imposed on retail sale of tangible personal property to end consumers and industrial
consumers.

- Retail sale tax is a tax levied on the sale of goods to final consumers (end-users) by a
retailer. It is a type of indirect tax paid by the consumer to the government, collected by
the retailer at the point of sale.

• Gross Receipts Tax

- Tax implement on sales of all business. They have been criticized for their “cascading”
or “pyramiding” effect, in which an item is taxes more than once because it makes its
way from production to final retail.

Excise Taxes
- Tax applies to a narrow range of products, such as gasoline or alcohol, usually to
producers or wholesalers rather than retailers.

- It is a type of indirect tax paid by the manufacturer or retailer, but ultimately passed on to
the consumer as part of the final purchase price.

15
FEDERAL EXCISE DUTY:
Federal excise duty (FED) is a tax imposed by the federal government on the manufacture, sale, or
consumption of specific goods and services, such as:
- Alcohol and tobacco products
- Fuel and petroleum products
- Luxury items and cosmetics
- Certain services like telecommunications and banking
FED is a type of indirect tax, which means it is paid by the manufacturer or service provider, but
ultimately passed on to the consumer as part of the final price. The revenue generated from FED is used
to fund public expenditures and government programs.

Week4th:
▪ The main tax collection agency in Pakistan, "FEDERAL BOARD OF REVENUE," has a
well-established nationwide network. Being among the biggest organizations in Pakistan
alone is due to its vast network, which consists of 18 regional tax offices and the three
major tax pairs.

▪ I completed an internship in the Regional Tax Office in Multan, working in six different
FBR departments under the direction of Mr. Mukhtar Hussain Thaheem, Director of
Human Resource Management. The work environment was quite diverse, with over 200
employees at FBR.

▪ The term "Central" was substituted with "Federal." As a result, for the excise charges
imposed by the 2005 All clearances will henceforth be self-assessed and require no
previous authorization; the system of physical supervision has been completely
eliminated.

▪ The duty will be paid on a monthly basis, and it will be due by the 15th of the following
month for all clearances made during the month. This is not like the old system when
duty had to be paid before clearance. Unlike the previous method, gate passes are not
needed for clearing. Adjusting the excise duty paid on input items used directly in the
manufacture of excisable goods has removed double taxation.
Week5th:
We study about the sections under (FBR) that take legal action in the fifth week.

16
Sec. 38: In accordance with this provision, a department officer may audit, inspect stocks, documents,
and other firm assets with the commissioner's consent when conducting an investigation.
Section 38B: A department official is entitled to request any information when conducting an audit.
Section 40B: This section grants the Department the authority to keep an eye on the acquisition,
manufacturing, and distribution of any particular factory.
Section 45B: Businesses are permitted to submit an appeal with the commissioner. Within 30 days, it
must be filed.
Section 46: Companies are entitled to file a second appeal with the appellate tribunal within sixty days
of the first one.
Section 47: Under these provisions, businesses have ninety days to submit a referral with the high
court. Withholding Tax: When transferring funds to other registered individuals, registered individuals
must withhold 20% (1/5) of the sales tax; if an unregistered individual receives the money, they must
withhold 100% of the sales tax.
Section 49: The person who bought the factory is responsible for paying any outstanding sales
taxes if the factory has any.
Sec.59: Newly registered manufacturers are entitled to a claim for input tax on locally purchased
items within 30 days, while import goods have a 90-day window. However, they must offer GDS
for imported items and tax in voice for things bought locally.

Week6th:

In this week, we study the Federal Excise Duty Act of 2005. Import, Export, Zero rating, Input
tax, Output tax, calculating tax liability, Tax credit not allowed
Import: Goods imported with custom or excise duties paid.
Export: No tax will be imposed on exported goods. This is a "0" rated tax, and input tax will be
recovered.
Zero Rating: Items will be taxed at the rate of zero percent; however, in the future, the
government will eliminate this rate, thus items won't be subject to zero percent taxation.
Input Tax: Previously paid tax, such as when a business buys raw materials and has already
paid sales tax.
Output Tax: Taxes deducted from the final product. These taxes are due to the government.
Calculating Tax Liability: Input tax was not deducted by a registered person during the
applicable period.

17
Structure of Your Concerned Specialization Department
To raise awareness among the general public about submitting income tax returns and declaring
assets, FBR uses its websites. Anything from tax information to return filing instructions can be
found on its website. They are marketing and raising awareness of taxes through print, digital,
and social media platforms. Additionally, they are educating every Pakistani citizen on the moral
obligation of paying taxes.

5. FINANCIALANALYSIS

Ratio Analysis:
In terms of tax collection, the Federal Board of Revenue (FBR) displayed a mixed performance during the
first half (H1) of FY 2023–2024. Even so, the total overall tax collection goal was met at 101%; nevertheless,
there were significant differences within the various tax categories. When it came to income tax or corporation
tax collection, direct taxes performed exceptionally well, exceeding expectations by collecting 120% of the H1
objective. On the other hand, sales tax fell short, with FBR only reaching 88% of the goal. Excellent results were
obtained from Federal Excise Duty (FED) collection, which collected 99% of the objective, nearly meeting the
H1 target. Only 84% of the H1 target was met in terms of customs duty collection; actual collection was
PKR 541 billion as opposed to the aim of PKR 642 billion.

Target
Tax Head FY: H1:
2023-24 2023-24
Direct tax 3883 1793
Sale tax 3607 1724
Federal excise duty 600 266
Custom 1324 642
All Taxes 9415 4425

According to provisional government, FBR has collected total revenue of 9415 billion during the
FY 2023-24 which is exceeded from the target of 4.691 billion. This shows the department
growth of 18% as compare to the collection of lastly 2023-24 that is 4425.
18
 Comparison of Net Revenue Collection during First Half of FY 2023-24
vs FY 2022-23

Target
Tax Head FY: H1:
2023-24 2022-23
COLLECTIONONDEMAND 2149 1526
ADVANCETAX/
1515 1272
PAYMENTWITHRETURN
WITHHOLDINGTAX 265 164
TOTAL 541 467
COLLECTIONONDEMAND 4469 3429

In the analysis of FBR’s revenue collection for H1 FY 2023-24 compared to H1 FY 2022-23, significant growth is
evident. Overall, there’s a notable increase of 30.3% compared to the same period last year. Direct Taxes surged by
40.8%, Sales Tax increased by 19.1%, and Federal Excise Duty (FED) saw a remarkable 61.6% rise. Customs Duty
also rose by 15.8%. These trends reflect dynamic shifts in revenue generation, showcasing FBR’s strategic tax
collection efforts amidst evolving economic dynamics.

Sales tax
Target
Tax Head H1: H2:
2023-24 2022-23
Sales Tax Import 589425 447125
Sales tax Domestic 925841 824850

Total Sale Tax 1,515,266 1,271,975

SALES TAX DOMESTIC VS IMPORT

The data illustrates a robust growth in sales tax revenue collection for both domestic and import sectors in the first

19
half of fiscal year 2023-24 compared to 2022-23. Sales Tax Domestic surged by 32%, from Rs. 447,125 million to Rs.
589,425 million, while Sales Tax Import increased by 12%, from Rs. 824,850 million to Rs. 925,841 million. The
combined total of Sales Tax Domestic and Import reached Rs. 1,515,266 million, up by 19% from the previous year’s
Rs. 1,271,975 million. These numbers signify a thriving economy with increased consumer spending and international
trade activities. Within sales tax, the share of domestic component has declined from 38.8% to 35% and contrary to
this; the share of Sales Tax on Imports has improved from 61%% to around 64% during H1

Major Revenue Spinners of Federal Excise Duty

(In billions)
H1: H1:
Description
2023-24 2022-2023 Growth%
Cigarettes 105,395 89,825 64.3%
Cement 74,507 71,229 4.6%
Beverage and concentrate 33,455 28,439 17.6%
Natural gas 9,617 9,429 2.0%
Services 8,979 32,076 -72%
Vehicles motor(Imp) 8,676 1,850 368.9%
Edible oil 4,360 2.686 62.4%
POL product 4,233 3,486 21.4%
Vegetable ghee 337 215 75.0%
Perfumery & cosmetic 347 286 21.4%
Other 27,623 10,953 14.7 %

Total 225,909 144,506 56.3%

During H1 of FY 2023-24, FED collection shows a robust net growth of 61% registering an increase of about Rs.100
billion as compared to the previous year. Cigarettes notably dominate FED revenue, contributing Rs. 105,395 million
in H1 2023-24, marking a substantial growth of 64.3% compared to the previous fiscal year. There is also a surge in
aerated waters/beverages revenue by 217.5% to Rs. 20,811 million. However, sectors like Motor Cars experienced a
significant decline of 46.8%, suggesting market challenges. The top 10 revenue spinners collectively contributed
85.3% of total FED revenue, while the “Others” category accounted for 14.7%, highlighting a diversified revenue
stream.

20
 6. SWOT ANALYSIS

Strengths Weakness
• One of the largest organization in the • Complication in recovery process.
public sector.
• It is difficult to monitor the whole
• FBR is a major source of revenue for organization.
Govt. of Pakistan.
• Tax collection system is not
• A computerized system for certain compatible for small social
registration. setups country.
• Law and Legislation for Strengthening • Older employees lack
FBR information technology.
• Rewards for recovery were banned Six
• Special allowances are given to
years ago.
employees according to their
performance. • Labor union spoils the work
environment where they
• Autonomous power increases the power
prioritize their personal goal
of Effective decision.
over the goal of the
• FBR is having 3 large tax pair offices and organization as a whole.
18 regional tax offices.
• Lack of promotion.
• Qualified and experienced management.

Opportunities Threats
• Organizational change for better working • Consultant persuades
environment.
taxpayers and encourages
• Multimedia to facilitate Human Resource
them on how taxpayers can
• Improve and speed up the system through
get rid oftaxes.
software and advance technology.
• New taxpayers can be created through • Taxpayers speculation due to lack of files
various strategies. automation.
• The tax system can evolve by • Unaware people get stuck in double
taxation
reviewing other countries tax
• Black sheep in the organization that
system
advise taxpayers on how to reduce their
taxes.
• Job rotation for dynamic learning
• Taxpayer can be deceived due to
• Rewards for specific receivables for
insufficient data
employee motivation.

21
 7. CONCLUSION

The fact that Pakistan pays less in taxes than many other nations is a well-established fact. Thus, the tax
system reflects some administrative performance and is reasonable in this regard. This in no way
indicates that the administration of taxes is operating smoothly. The low tax-to-GDP ratio, however, has
meant that resource mobilization efforts have had less impact. Because of a number of issues, the cost of
recovery in this situation is a poor predictor of the effectiveness of the tax system. The tax system in
Pakistan is beset with numerous issues, including a large tax exemption, a low GDP ratio, a low
proportion of direct taxes, an ineffective audit system, a significant tax gap, and a penal system.When
these problems are resolved, tax revenue will rise significantly, which will lower the amount of money
collected in costs.As a result of managing human and physical resources efficiently, revenue collection
should improve due to reduced recovery costs.It will take more resources to adopt and
modernize.People with skills need to be developed in this way. Additional funding for human resource
development is required, as is a modernization of the tax code.

22
 8. RECOMMENDATION:
• Boost system performance and speed with cutting-edge technology and software.

• By examining the tax systems of other nations and implementing their methods in our own situation,
the tax system can change.

• Collaborating for dynamic learning

• Workforce punctuality

• Rewarding particular receipts to motivate employees

• Gather documentation from other organizations to eradicate corruption.

• Keep people informed about the advantages of registering and prevent double taxes.

• Teach workers about contemporary auditing techniques.

• Fraud awareness and indicators of fraud need to be well-known for examination.

23
 9. References
1. Annual performance report (2023-24)

2. Annual performance report (2022-23)

3. Audit policy FBR

4. https://fbr.gov.pk/introduction-fbr/131167/57

5. www.fbr.gov.pk

24