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January 17, 2020

RTO-II Karachi posts 24pc growth in revenue collection

Business

January 17, 2020

KARACHI: Regional Tax Office (RTO) II Karachi has posted 24 percent growth in revenue collection during the first half of 2019/2020, despite sharp decline in tax revenue from cash withdrawal and new car registration, officials said on Thursday.

The tax office collected Rs51.17 billion during July-December of the current fiscal year as compared with Rs41.34 billion in the corresponding period of the last fiscal.

Sources said the tax office witnessed setback in revenue collection under the heads of cash withdrawal from banks, which fell 62 percent. It collected Rs3.94 billion during July-December 2019 as compared to Rs10.49 billion in the same period of the last year. Advance tax was applicable prior to February 2019. Through Finance Supplementary (Second Amendment) Act 2019 the application of tax was withdrawn for persons making compliance to income tax return filing. Later through Finance Act 2019, the withholding tax on cash withdrawal was restricted to persons who were not appearing on the Active Taxpayers List (ATL).

Another massive decline in collection was seen in collection from registration of new motor vehicles, which fell by 44 percent. The tax office collected Rs451 million during first half of the current fiscal year as compared with Rs805 million in the corresponding period of the last fiscal.

Sources said revenue registered decline due to sharp decline in sales of locally assembled cars during the period.

According to data released by the Pakistan Automotive Manufacturers Association (PAMA), car sales plunged 44 percent to 67,019 units in the first half of current fiscal as compared with 120,066 units in the corresponding period of the last fiscal year. They attributed the 24 percent growth in collection of RTO-II Karachi to broadening of tax base (BTB) efforts and significant rise in tax collection from profit on debt.

Collection from profits on bank deposits increased to Rs27.67 billion in July-December 2019 as compared with Rs11.12 billion in the corresponding period of the last year, registering 149 percent growth. Sharp increase has been attributed to high interest rates which encouraged investors to invest in the banking system. Deposits of banking system have increased to an all time high of Rs14.63 trillion by Dec 2019 from Rs13.35 trillion in the same period of the last year, according to statistics released by the State Bank of Pakistan.

The BTB efforts of the RTO-II Karachi yield 44 percent increase in return filing for tax year 2019. Sources said the tax office received 121,300 tax returns so far for tax year 2019 as compared with 84,100 income tax returns for tax year 2018.

Head wise collection of the tax office revealed that it collected Rs47.7 billion as income tax during the first half of the current fiscal year as compared with Rs38.44 billion in the same period of the last fiscal year, showing 24 percent growth.

It collected Rs3.5 billion as sales tax during the period under review as compared with Rs2.88 billion in the same period of the last fiscal year.

Sources said the collection of sales tax would further increase during the remaining months of current fiscal year due to initiatives of the Federal Board of Revenue regarding installation of Point of Sales (POS) for real-time sale reporting by big retailers.