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December 12, 2019

Tax department’s collection up 27pc to Rs43bln in five months

Business

December 12, 2019

KARACHI: A regional tax office of the Federal Board of Revenue witnessed a 27 percent growth in revenue collection to around Rs43 billion in the first five months of the current fiscal year of 2019/20 as income tax was seen uptrend on new initiatives to broaden base, officials said on Wednesday.

The officials said Regional Tax Office (RTO)-II Karachi collected Rs42.67 billion during July-November 2019/20 compared with Rs33.59 billion in the corresponding period of the last fiscal year.

The tax office saw double-digit rise in collection owing to efforts to broaden the tax base. RTO-II officials attributed the significant growth in revenue collection to the efforts of the tax office to broaden the tax base, which resulted in massive growth of income tax returns filing. The income tax returns filing within the jurisdiction of RTO-II Karachi registered a 64 percent increase.

The details showed that the tax office received 89,140 income tax returns for the tax year 2019 compared with 54,230 received in tax year 2018. The officials said the returns filing for tax year 2019 would further increase. Due date of filing is December 16, 2019.

The officials also attributed the increase in revenue to measures taken in the current fiscal year’s budget of 2019/20 through which the withholding tax rate for certain transactions increased by 100 percent.

The breakup of the collection by RTO-II Karachi showed that the income tax collection increased 27.43 percent to Rs39.86 billion during July-November 2019/20 compared to Rs31.28 billion in the corresponding period of the last fiscal year.

Collection of withholding tax by the RTO-II Karachi, however, fell sharply 63 percent. The collection under this head declined to Rs3.16 billion during the first five months of the current fiscal year compared with Rs8.78 billion in the corresponding months of the last fiscal year. This was despite introduction of 10th schedule to the Income Tax Ordinance, 2001 through Finance Act 2019 under which individuals not on the active taxpayers list are liable to pay 100 percent additional withholding tax.

The officials attributed the decline due to abolishing of the imposition of withholding tax on cash withdrawal by return filers. The slowdown in auto industry also affected the revenue collection of the tax office. The collection of withholding tax under this head fell 43 percent to Rs382 million during the period under review compared with Rs680 million in the same period of the last fiscal year.

In July-November, car sales plunged around 45 percent year-on-year primarily due to higher auto prices post rupee devaluation and higher interest rates for auto financing. The tax officials said the income tax collection would have been much higher if the revenue collection from the above two heads had posted growth.

Sales tax collection by the RTO-II Karachi registered 46 percent growth to Rs3.15 billion during July-November 2019/20 compared with Rs2.15 billion in the same period of the last fiscal year.