Direct tax collection down 3pc to Rs231bln

KARACHI: The Federal Board of Revenue (FBR) collected Rs231.57 billion in direct taxes during the first quarter of the current fiscal year, down more than three percent over the previous year as the major banking and oil sectors made relatively lower contributions.

The ministry of finance data showed that the FBR collected Rs239.67 billion in the same head in the corresponding quarter of the last fiscal year.  A tax official said the prices of petroleum, oil and lubricant products noticeably declined during the period that trimmed the oil sector’s profitability. “The oil marketing companies pay advance tax on the bases of their quarterly turnover,” the official said. “Due to fall in turnover, the revenue authorities were unable to get good amount from this sector.”

The banking industry – another key sector of the economy – posted a four percent decline in its profits for the quarter, Topline Research said in a report. Tax authorities are endeavoring to increase the share of direct taxes in the total tax collection. They have taken several steps, such as introduction of withholding taxes and change in filing procedures.

The major components of direct tax are income tax, workers’ welfare fund and capital value tax. Of the total revenue target of Rs3,621 billion for the 2016/17 fiscal year, set for the FBR, Rs1,558 billion was fixed as direct taxation target – 43 percent of the total. 

The latest collection showed that the share of direct taxes in the first quarter was 37 percent. Soft oil prices also affected the collection of indirect taxes, but improvement in customs duty offset the impact.  The indirect taxes grew 9.16 percent to Rs393 billion during the first quarter. Sales tax collection increased three percent to Rs261 billion.