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February 21, 2020

Tax collection on exports surges 38pc in July-January

Business

February 21, 2020

KARACHI: Income tax collection from exports surged 38 percent to Rs4 billion in the first seven months of the current fiscal year of 2019/20 as rupee devaluation increased earnings of exporters in local currency.

Income tax collection from exports increased from Rs2.94 billion in the corresponding period a year earlier. Sources in Large Taxpayers Unit (LTU) Karachi, said rupee continued to lose its value against the US dollar during the period, giving a boost to revenue collection at a time when the annual figure is expected to majorly fall short of the target. Exporters are required to pay one percent withholding tax at the time of realisation of export receipts. This tax is also final tax liability for exporters.

LTU Karachi officials said export services are also liable to one percent of withholding tax but in this case it is minimum tax liability and the recipient of export payment should be on the active taxpayers list (ATL).

They said individuals, who receive export payments despite being ATL member, have to incur 2 percent withholding tax rate. The collection of tax increased 22 percent to Rs581 million in January 2020 compared with Rs474 million in the same month of 2019.

Total exports of the country increased 2.2 percent during the first seven months of the current fiscal year to $13.51 billion. That was compared to $13.21 billion in the corresponding period of the last fiscal year. In terms of rupee, exports jumped 22.11 percent in July-January 2019/20 to Rs2.11 trillion. That was compared with Rs1.72 trillion in the same period of the last fiscal year, Pakistan Bureau of Statistics (PBS) data showed.

The PBS data showed export receipts were calculated at $=Rs154.656 for January 2020 and $=Rs138.695 for January 2019. Similarly, export receipts were calculated at $=158.829 for July 2019 and $=124.353 for July 2018.

Sources, however, said income tax collection from exports would be declining in the coming months as the local currency remained stable during the last few months of the last fiscal year. The stability is expected to continue on curative foreign inflows in the current fiscal year.

They said the country needs to improve the numbers in terms of dollars to increase the revenue collection from exports sector.