KARACHI: Large Taxpayers Unit (LTU) Karachi has registered a 16 percent increase in revenue collection during the first four months of the current fiscal year of 2019/20 despite contraction in large scale manufacturing and slowdown in economic activities, official data showed on Thursday.
The unit collected Rs402.16 billion during the July-October period compared with Rs346.86 billion in the corresponding period of the last fiscal year.
The LTU Karachi is the major revenue collecting arm of the Federal Board of Revenue (FBR) and contributes more than 30 percent of total revenue collected at the national level. The unit collects tax revenue from companies with huge turnover and their profit or losses impact the collection of the unit. Sources said large scale manufacturing registered a 6.04 percent contraction in growth during July-August of the current fiscal year compared with the same period of the last fiscal year. The slowdown in economy related to lower consumption hurts revenue collection.
The sources said if these two factors were to witness buoyancy the collection would have been much better. They attributed the present growth to the budgetary measures taken in the budget 2019/20. The measures included elimination of sales tax zero-rate regime, imposition of 100 percent withholding tax on individuals not appearing on active taxpayers list (ATL) and uniform rates of sales tax on petroleum products. Income tax collection posted 10 percent growth to Rs48.83 billion in the July-October of 2019/20 as compared to Rs44.42 billion in the corresponding period of the last fiscal year.
Of total income tax collection, the withholding tax collection amounted to Rs7.82 billion during the period under review compared with Rs7.186 billion during the corresponding period of the last fiscal year.
The sources said growth in withholding tax collection from the heads that were not subject to conditions of ATL witnessed decline in collection. The collection data of LTU Karachi showed that noncash banking transactions and advance tax on air tickets, which are not subject to ATL condition, witnessed decline in collection.
The unit issued income tax refunds amounting to Rs9.7 billion during July- October 2019/20 was 100 percent higher when compared with Rs4.85 billion in the corresponding period of the last fiscal year.
The collection of indirect taxes posted 17 percent growth to Rs353.33 billion during the period under review compared with Rs302.45 billion in the same period of the last year. The sources attributed the 17 percent growth to elimination of zero-rated sales tax regime during the current fiscal year. They said the sectors subject to zero-rated sales tax are now paying 17 percent sales tax.
(This news/article originally appeared in The News on November 8th, 2019)