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February 15, 2020

LTU Karachi collects Rs764bln in July-January

Business

February 15, 2020

KARACHI: Large Taxpayers Unit (LTU) Karachi, the key revenue spinner of the Federal Board of Revenue (FBR), saw a 14 percent growth in collection during the first seven months of the current fiscal year of 2019/20 owing to taxation measures by the government that is bent on mobilising resources, official data showed on Friday.

The LTU Karachi collected Rs764 billion in July-January FY2020 compared to Rs668 billion in the corresponding period of FY2019.

Growth in revenue, despite contraction in imports and sinking economy, is certainly attributable to withdrawal of zero-rated facility, withholding tax on non-compliant taxpayers, and uniform sales tax rates on petroleum products.

The sources said contraction in imports and lower industrial outputs badly impacted the revenue growth so far during the current fiscal year.

Large scale manufacturing dropped around 3.35 percent in the first half, Pakistan Bureau of Statistics’ data showed. Imports dipped 16 percent to $27.25 billion in the first seven months.

The unit has jurisdiction over corporate entities with large turnover and their profits/losses reflect in its revenue collection.

The sources said the unit issued huge amount of refunds and that resulted in flat growth in collection of direct taxes.

LTU Karachi collected Rs126 billion as income tax in July-January compared to Rs125 billion a year earlier, while it released around Rs15 billion as income tax refunds and Rs4.8 billion was allowed as adjustment against taxpayers’ liabilities.

Of total income tax, withholding tax collection grew eight percent to Rs47 billion. The sources said withholding tax collection under various heads witnessed decline due to higher number of returns filing.

However, under a few heads there was a significant growth in collection of withholding taxes because of imposition of 100 percent additional tax on individuals not appearing on active taxpayers list.

Sales tax collection increased 18 percent to Rs598 billion in the seven-month period. The sources attributed the growth to elimination of zero-rated sales tax regime during the current fiscal year.

Businesses that were subject to the zero-rated sales tax are now paying 17 percent sales tax. Collection of sales tax from imports witnessed 20 percent growth to Rs473 billion in July-January period. Sales tax collection from domestic sources increased 17 percent to Rs132 billion.

Large Taxpayers Unit Karachi also issued Rs7.6 billion as sales tax refunds during the seven months of the current fiscal year. The collection was a gigantic 304 percent higher when compared with Rs1.89 billion in the corresponding period of the last fiscal year.