Sales tax collection on import stage grows by 15pc in July-August

KARACHI: The sales tax collection at import stage registered 15 percent growth during the first two months of the current fiscal year owing to increase in tax rates and other measures taken in the latest budget, officials said on Thursday.

The collection of sales tax increased to Rs135.18 billion during first two months (July-August) of current fiscal year as compared with Rs117.27 billion in the corresponding period of the last fiscal year.

This showed that revenue collection has improved despite decline in imports during the period under review.

The import bill has reportedly declined by 21.74 percent to $7.66 billion in the first two months of the current fiscal, as compared with $9.78 billion in the same period of the last fiscal year.

Large Taxpayers Unit (LTU) Karachi has jurisdiction over sales tax collection on imported goods that were cleared from customs stations located in the city.

The customs stations, including Model Customs Collectorate (MCC) Appraisement East,

MCC Appraisement West, MCC Preventive, Jinnah International Airport, and Port Qasim, collect sales tax on imported goods on behalf of the LTU Karachi.

MCC Port Muhammad Bin Qasim has posted the highest growth in revenue collection. The customs station collected Rs62.12 billion during July-August 2019 as compared with Rs51.07 billion in the corresponding period of the last fiscal year, showing 22 percent growth.

The FBR sources said that revenue measures taken in the budget were a major driver for enhanced collection.

One of the steps taken by the government was to abolish zero-rating allowed to the export sector. Sources said that the zero-rating facility was grossly misused on import of fabric and processed fabric.

Therefore, the standard rate of 17 percent was applied on those products falling under zero-rated regime.

They said increase in customs duty also resulted in higher revenue collection of sales tax on imported goods. The government in the budget 2019/2020 increased the rate of additional customs duty for non-essential items.