Tax collection grows 29 percent to Rs84 billion in nine months

KARACHI: Regional Tax Office (RTO) –II Karachi posted a 29 percent growth in revenue collection during the first nine months of the current fiscal year of 2019/20, official data showed said on Tuesday.

The tax office collected Rs84 billion in the July-March FY2020 compared to Rs65 billion in the corresponding period of the last fiscal year. Sources said the tax office witnessed slower revenue growth in March due to lockdown in most of the parts of the country to stop the spread of coronavirus.

However, the revenue growth during the three quarters was unprecedented despite sharp fall in withholding tax collection from cash withdrawal. The tax office witnessed setback in revenue collection in the heads of cash withdrawal from banks, which fell 62 percent. It collected Rs6 billion during July–March compared with Rs15.9 billion in the same period of the last year.

The advance tax remained applicable till February 2019. Through Finance Supplementary (Second Amendment) Act, 2019, the application of tax was withdrawn for people who comply with the income tax returns filing.

Later through Finance Act, 2019, the withholding tax on cash withdrawal was restricted to people who were not appearing on the active taxpayers list. The RTO-II Karachi also witnessed decline in withholding tax under many other heads due to change in laws.

The increase in tax collection, however, can be attributed to broadening of tax efforts of the tax office. The tax office took measures to bring professionals and sectors of the economy into the tax net. The RTO-II Karachi recently issued notices to doctors, teachers, and fashion designers to file their income tax returns and declare wealth.

The head-wise collection of the tax office revealed that it collected Rs79 billion as income tax during the first nine months of the current fiscal year compared with Rs60.62 billion in the same period of the last fiscal year, showing 31 percent growth.

The office collected Rs5 billion as sales tax during the period under review compared with Rs4.4 billion in the same period of the last fiscal year. The tax office collected Rs7.5 billion during March 2020 compared with Rs6.7 billion in the same month of 2019, showing a 12 percent growth.

In previous months, the revenue collection growth of the tax office was in the range of 40 percent and 60 percent. The sources said the collection would adversely be affected due to ongoing lockdown.