Sales tax collection on domestic supplies surges 77pc in July

By Shahnawaz Akhter
August 08, 2020

KARACHI: Sales tax collection from domestic supplies rebounded 77 percent year-on-year in July as economic activities started to resume after easing lockdown, sources said on Friday.

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Sales tax collection from domestic supplies increased to Rs30 billion in July compared to Rs17.2 billion the same month a year ago, according to data from Large Taxpayers Unit (LTU) Karachi.

The sources in the LTU Karachi said economic activities have almost restored after a four-month of lockdown since late March that adversely affected all industrial and business activities. However, the increased manufacturing activities and higher consumption demand of locally-produced and imported goods helped the sales tax collection from domestic sources grow.

The source said high inflation has also helped the tax revenue collection to grow. Headline inflation – or consumer price index inflation – clocked in at 9.3 percent in July compared to 8.6 percent in the previous month, according to data released by Pakistan Bureau of Statistics. On month-on-month basis, it increased by 2.5 percent in July 2020 compared to an increase of 0.8 percent in the previous month and an increase of 1.8 percent in July 2019, it said.

Officials at the LTU Karachi said Chief Commissioner Badaruddin Qureshi had issued special instructions to all the commissioners to enhance monitoring of domestic to realise the actual potential of the sales tax.

According to the official figures, total collection of the LTU Karachi registered 19 percent growth to Rs100 billion during July compared with Rs84.25 billion in the same month of the last year.

The unit also surpassed the revenue collection target for the month. The LTU has achieved around 140 percent of the assigned target. The Federal Board of Revenue (FBR) assigned around Rs71 billion as collection target to the LTU Karachi and it collected around Rs100 billion during the month.

LTU Karachi officials attributed the growth in revenue collection to better economic conditions especially for the big corporate entities, which are registered with the LTU Karachi, after the lifting of industrial shutdown.

According to the breakup of the revenue collection, the income tax collection of the unit posted 228 percent growth to Rs10.29 billion in July compared with Rs3.1 billion in the same month of the last year.

The unit also issued Rs1.57 billion as income tax refunds during the month. The Large Taxpayers Unit issued around Rs1.94 billion as sales tax refund during July.

The collection of indirect taxes – sales tax and federal excise duty – registered 11 percent growth to Rs90 billion in July compared with Rs8 billion in the same month last year.

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