LTU’s tax collection remained flat at Rs171.46bln in two months

KARACHI: The revenue collection under sales tax and federal excise duty by on imported goods remained almost flat at Rs171.46 billion during the first quarter of the current fiscal year, owing to increase exemptions and concessions on the clearance of goods and slow growth in import bill, sources said on Monday.

Sources in the Federal Board of Revenue (FBR) said the Large Taxpayers Unit (LTU) has been authorised to collect sales tax and federal excise duty on imported goods cleared at ports located in Karachi.

According to statistics made available, the unit collected Rs171.46 billion during July–September 2018 as compared to Rs171.43 billion in the corresponding period of the last year.

Flat growth in indirect taxes at the import stage would have a negative impact on the overall revenue collection, the sources said, adding that the FBR collected Rs836 billion during the first half of the current fiscal year as against Rs766 billion collected during the same period of the previous fiscal year, depicting a growth of 9.13 percent.

The revenue authority not only missed the first quarter collection target, but also created an alarming situation for the next quarters.

The Federal Board of Revenue needs to maintain 15.4 percent growth rate to achieve Rs4,435 billion for the full fiscal year as it collected Rs3,842 billion in the last fiscal year, FBR’s annual report showed.

The latest data of the import stage showed sales tax collection stood at Rs169.38 billion during the first quarter of the current fiscal year as compared to Rs168.48 billion in the corresponding quarter of the last fiscal year.

The sources at the Large Taxpayers Unit Karachi attributed the flat growth in sales tax collection to rationalisation of sales tax on petroleum products during the period, as the government avoided to pass on the impact of increase in the international oil prices and absorbed the loss through reducing sales tax rates.

Exemptions granted on various sectors for import of raw material also resulted in decline in revenue they said. The break-up of sales tax collection at Customs collectorates showed decline except for the MCC Port Muhammad Bin Qasim. The import bill for the period July–August 2018 increased 1.01 percent to $9.83 billion as compared to $9.73 billion during the same period of the last fiscal year.

The collection of federal excise duty, on the other hand, registered 30 percent decline during the period under review to Rs2.069 billion as compared to Rs2.94 billion in the corresponding period of the last fiscal year.