Thursday, October 21, 2021

Revenue from goods, services up 9 percent in 5 months

KARACHI: Collection of withholding tax on sales of goods and services increased 9 percent during the first five months of FY2021, as economic activities had started recovering in that period after a letup in the first wave of COVID-19 pandemic, data showed on Friday.

The collection of withholding income tax increased to Rs14.154 billion during the first five months of the current fiscal year as compared with Rs13 billion in the same period of the last fiscal year, according to official data of Large Taxpayers Office (LTO) Karachi.

However, sources at the tax office said the second wave of the pandemic had already started impacting economic activities, adding, though the government had not imposed strict lockdown, services providers were facing challenges owing to anti-virus SOPs (Standard Operating Procedures) compliance.

According to the statistics the collection of withholding tax on goods grew 15 percent to Rs5.84 billion during July–November 2020 as compared with Rs5.07 billion in the corresponding period of the last fiscal year.

The officials attributed this growth during the period to an increase in manufacturing and trading activities after an ease in coronavirus restrictions.

Large-scale manufacturing (LSM) during July–October period increased 5.46 percent, according to Pakistan Bureau of Statistics (PBS).

The collection of withholding income tax on sale of services declined 9 percent to Rs6.2 billion during the first five months of the current fiscal year as compared with Rs6.75 billion in the same months last fiscal year.

Sources said the services sector had to suffer this decline because of the mandatory compliance of SOPs, which required them to make arrangements for the staff to work from home.

The collection of tax on payment on contracts however grew 58 percent to Rs1.23 billion during the period under review as compared with Rs782 million in the same period last fiscal year. This growth was a likely result of an increase in the release of funds under public sector development programs (PSDP).

The collection of withholding tax on sale of goods and services during the month of November 2020 grew 7 percent to Rs2.81 billion compared with Rs2.63 billion in the same month of the last month.

Sources said that the revenue collection outlook during the remaining months of the current fiscal year was uncertain. The ministry of finance in its monthly economic outlook released a day earlier said the effects on the economic outlook would depend on the intensity of pandemic and duration of restrictions.

The ministry added that uncertainty to the outlook was due to resurgence of new waves of infections world-wide and also in Pakistan, necessitating imposition of new restrictions on social contact that may impact on the economic expansion.

Source: The News

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