Sales tax collection on imports up 13.5pc in FY20

KARACHI: The collection of sales tax at import stage registered 13.5 percent growth during 2019/20 despite significant decline in import bill of the country after the pandemic partially halted global trade.

According to official statistics made available on Thursday, the collection of sales tax at import stage increased to Rs780 billion during fiscal year 2019/20 as compared with Rs686 billion in the preceding fiscal year.

The collection of sales tax on imports during June 2020 registered growth of 26 percent to Rs64 billion when compared with Rs51 billion collected in May 2020.

It is worth mentioning that the government relaxed the lockdown in the month of June and allowed to partially resume business activities. The measures taken by the government to ensure clearance of stuck up consignments helped revenue generation during the month.

The import bill of the country fell to $40.86 billion during July-May 2019/20 as compared with $50.41 billion in the corresponding period of the last fiscal year, showing decline of around 19 percent.

Officials at Large Taxpayers Unit (LTU) Karachi, which collects the sales tax on imported goods from all sea ports, said that imports had fallen across the board owing to several restrictions in the shape of regulatory duty and higher customs duties.

They said that the cases of coronavirus across the globe after identification in China badly impacted the import growth.

They, however, attributed the increase in sales tax collection to abolishing of zero-rating regime for all local and import supplies in the last budget 2019/20.

They said that the zero-rated scheme was replaced with normal sales tax rate of 17 percent.

However, exporters had been allowed to claim refunds against payment of 17 percent on import of their raw material and other capital goods.

The customs collectorates in Karachi collect sales tax at clearance stage and transfer the amount of sales tax to LTU Karachi.

The collection of sales tax by Port Qasim Collectorate posted 24 percent growth during the period under review. The collectorate collected Rs372 billion as sales tax during 2019/20 as compared with Rs300 billion in the preceding fiscal year.