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February 5, 2019

Sales tax, FED collection posts 11 percent growth in January

Business

February 5, 2019

KARACHI: After posting a continuous decline in first six months of current fiscal year, the collection of sales tax and federal excise duty (FED) on import stage registered 11 percent growth in January 2019.

The combined collection of indirect taxes at import stage increased to Rs61.45 billion in January 2019 from Rs55.4 billion in the same month of the last year, according to statistics made available on Monday.

The rise in revenue collection was mainly attributed to increase in sales tax on petroleum products for the month of January 2019. The Federal Board of Revenue (FBR) notified increase in sales tax rates through SRO 1574(I)/2018 for the January.

The government increased sales tax rates for all petroleum products to 17 percent from rates in December 2018, when the rate was 8 percent on petrol, 13 percent on high speed diesel, two percent on kerosene, and 0.5 percent on light diesel oil.

The collection of sales tax for the month under review increased by 11 percent to Rs60.45 billion as against Rs54.55 billion in the same month of last year. Similarly, the collection of FED registered 22 percent growth to Rs991 million, as compared with Rs814.48 million in the same month of the last year.

The overall collection from sales tax and FED at import stage in first seven months remained flat. The total collection under this head was at Rs400.35 billion during July-January 2018/19 as compared with Rs399.84 billion in the corresponding period of the last fiscal year.

Large Taxpayers Unit (LTU) Karachi, the major revenue collection arm of the FBR, reports sales tax and FED from imported goods. While four collectorates of customs collect these taxes on behalf of the LTU Karachi at the time of clearance of consignments.

Officials at the LTU Karachi said the collection from this head would further improve in February 2019 as the government had maintained the higher sales tax rates for the month. They, however, said that revenue collection would largely depend on the consumption side. They said that due to surplus stock and lower demand of furnace oil, the tax collection from this component was badly affected.

The sales tax collection during the first seven months of the current fiscal year slightly went down to Rs394.155 billion as compared with Rs394.95 billion in the same period of the last fiscal year. On the other hand, the collection of FED posted four percent growth to Rs5.65 billion during July-January 2018/19 to Rs5.42 billion in the corresponding period of the last fiscal year.

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