KARACHI: The Large Taxpayers Unit (LTU) Karachi collected Rs1.13 trillion during the first 11 months of the current fiscal year, up five percent year-on-year, despite challenging economic conditions, sources said on Wednesday.
The LTU Karachi, the major revenue collection arm of the Federal Board of Revenue (FBR), pulled in Rs1.07 trillion during the July-May period of 2018/19.
Sources in LTU Karachi said growth momentum slowed down due to consistent contraction in revenue collection during the past three months due to lockdown imposed to prevent spread of coronavirus.
The unit has assessment jurisdiction over high turnover corporate entities, including oil marketing companies, banks, insurance, cement, sugar and steel. The sources said the lockdown adversely impacted the sales and income of such entities.
They said major revenue shortfall came in direct taxes, which fell 11 percent during the first 11 months of the current fiscal year.
The unit collected Rs171 billion as direct taxes during July-May 2019/20, compared to Rs193.8 billion in the same period of the last fiscal year. Out of total direct tax collection, the unit issued Rs18.21 billion as income tax refund during the period under review compared with Rs12.86 billion in the corresponding period of the last fiscal year, showing 42 percent growth.
The sources also attributed the decline in direct taxes to lower activity of audit exercise during the period. The recovery through audit exercise fell 59 percent to Rs10.89 billion in July-May 2019/20 as against Rs26.27 collected in the same period of the last fiscal year. The companies pay advance income tax on a quarterly basis on estimates for the full fiscal year. So far the collection of advance tax also fell five percent to Rs110 billion compared with Rs116.42 billion.
The withholding tax, another component of direct tax collection, however remained flat at Rs69.38 billion during the first 11 months of the current fiscal year.
On the indirect tax side, the unit posted 10 percent growth in sales tax collection despite issuance of refunds, which grew 216 percent.
The collection of sales tax amounted to Rs894 billion in July-May, compared with Rs814 billion in the same period of the last fiscal year.
Sales tax (domestic) collection fell one percent to Rs187.58 billion, compared with Rs189.61 billion. The fall in sales tax (domestic) collection has been attributed to stalled business activities due to lockdown. The major shortfall recorded under the head came from sales from petroleum products where both consumption and prices significantly declined.
However, sales tax collection at import stage posted 14 percent to Rs719 billion during July-May, compared with Rs629 billion in the same period of the last fiscal year.
The unit issued Rs13.14 billion as sales tax refund during the period under review, compared with Rs4.16 billion refunds issued in the same period of the last fiscal year. The other component of indirect taxes – federal excise duty (FED) – also posted a 10 percent decline to Rs59 billion compared with Rs65.65 billion.