KARACHI: Income tax collection from sale of goods and services fell 5 percent to Rs27.5 billion during the last fiscal year of 2019/20 owing to slackened demand and that was precipitated by...
KARACHI: Income tax collection from sale of goods and services fell 5 percent to Rs27.5 billion during the last fiscal year of 2019/20 owing to slackened demand and that was precipitated by monthslong lockdown, official data showed.
Collection of income tax on payments on sale of goods and services decreased from Rs29 billion in the preceding fiscal year, according to the latest data compiled by Large Taxpayers Unit (LTU) Karachi. However, tax collection on royalty payment amounted to Rs1.3 billion during the fiscal year as opposed to zero collection a year earlier.
The Federal Board of Revenue (FBR) collects the taxes at different rates under the Income Tax Ordinance 2001. The decline was expected as economic activities slowed to trickle last fiscal year. Growth came down to 0.4 percent in FY2020, according to the finance ministry.
Under the stabilisation program, Pakistan’s economy was already reeling under demand containment and the situation was exacerbated due to lockdown imposed in late
March after the coronavirus outbreak.
The social restriction also brought industrial wheels to halt, adversely hurting the revenue efforts. Officials at the LTU Karachi said lockdown upended the supply of goods and tax collection was subsequently hurt.
The FBR collected Rs3.98 trillion in revenue in FY20, a little up from Rs3.82 trillion a year earlier. The annual revenue target was revised downward several times. Initially, the target was envisaged at Rs5.55 trillion.
Then it was reduced toRs5.23 trillion and further slashed to Rs4.80 trillion. In the post COVID-19 scenario, it was finally set at Rs3.90 trillion in line with a loan agreement with the International Monetary Fund.
Sources said collection of income tax on payments on sale of goods and services is expected to recover during the current fiscal year as lockdown started to ease. Further, the government housing finance scheme would generate more revenue for the tax authorities.
The government announced subsidy on housing finance to boost construction sector. In July-June, the LTU collected Rs14.8 billion from payment made against services. However, the collection posted two percent decline when compared with Rs15.1 billion in the preceding fiscal year.
The tax collection from payments made on sales of goods recorded 21 percent decline to Rs9.64 billion. That compared with Rs12.1 billion in the preceding fiscal year. The income tax collection on contracts registered a nominal growth of one percent to Rs1.74 billion during the fiscal 2019/20. That compared with Rs1.72 billion in the preceding fiscal year. Gross revenue amounted to Rs4.12 trillion during the last fiscal year compared to Rs3.89 trillion a year earlier.