Collection of sales tax on services grows 31pc in 2017/18

KARACHI: Collection of sales tax on services sharply increased 31 percent during the last fiscal year of 2017/18 as provinces brought new services into the net, official data showed.

The fiscal operation data released by the finance ministry revealed that all the four provinces collected Rs223.86 billion during the last fiscal year compared with Rs170.8 billion in the preceding fiscal year.

The provinces started collecting sales tax on services after the 18th amendment into the constitution, which was passed by the National Assembly in 2010.

Sindh was the first province, which started collecting tax on services.

The other provinces also followed and established their revenue boards for generation of revenue for development expenditures.

The Punjab has taken lead in showing significant performance of revenue collection during the last fiscal year. The province collected Rs105.8 billion in 2017/18 compared with the collection of Rs77.74 billion, posting a 36.2 percent growth.

The Punjab Revenue Authority exhibited decent performance due to initiative of recovery of arrears and bringing new services into the tax net.

Another reason for substantial increase in revenue was change of definition related to place of business.

In budget 2017/18, the province included agent, associates and franchise as services to boost the revenue collection.

Sindh collected Rs99.88 billion during the fiscal year of 2017/18, 27.02 percent higher over Rs78.63 billion in the preceding fiscal year.

The Sindh Revenue Board (SRB) was assigned Rs100 billion in target for the fiscal year.

The rise in revenue collection by the SRB may be attributed to various amendments announced through provincial Finance Act 2017. One of the major amendments was short-paid amount recoverable without notice.

Further, the SRB also launched monitoring and tracking of service through electronic means.

The revenue collection by Khyber Pakhtunkhwa (KPK) has shown the lowest growth when compared with other provinces.

KPK revenue authority could collect Rs11 billion during the last fiscal year compared with Rs10.27 billion in the preceding fiscal year, showing a 7.10 percent growth.

Balochistan’s revenue authority exhibited the highest growth of 73.188 percent.

The province collected Rs7.17 billion in the last fiscal year compared with Rs4.14 billion in the preceding fiscal year.

With a significant growth in provincial collection of sales tax on services, the share in the tax to GDP ratio increased to 1.6 percent in 2017/18 compared with one percent in the preceding fiscal year, the official data showed.