mujahideen
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Tax more to stay on course
Islamabad (Shahbaz Rana): After dismal performance in direct taxes during first half-year, the tax authorities are contemplating to levy additional indirect taxes aimed to recover revenue shortfall and meet annual target of Rs 1025 billion.
Reliable sources in FBR Headquarters said that Federal Board of Revenue is considering three different proposals to levy sales tax primarily to bridge the gap of Rs 35 billion that occurred due to less than expectations performance in direct taxes.
President Pervez Musharraf has recently given green signal to economic managers to take all appropriate measures, including levying of additional taxes and cuts on expenditure to remain on course. Reportedly the Presidency had declined any move to revise annual economic indicators rather it asked to unearth the hidden potential.
In addition, the authorities have also asked the Direct Tax wing to improve its performance in Withholding Tax (WHT) collection that, according to the sources, the relevant authorities failed to do so.
In last quarterly conference, the FBR marked a number of sectors where non-deduction of WHT was occurring only because of ineffective monitoring and mismatching of the information being received form different quarters. The authorities also decided to re-check the list of withholding agents.
The FBR has suffered a revenue shortfall of Rs 35 billion during July-December as against its revised revenue target. The major setback was in direct taxes. The tax bosses estimated a loss of about Rs 28 billion only in less collection on income tax and corporate tax returns.
The nominal revenue collection on rental income from the properties is another source of tension for the administration. The tax bosses have to carefully devise new strategy of imposing sales tax on some new or even existing tapped sectors.
The performance in this head was not so admirable during the last fiscal year when the tax authorities accumulated Rs 311 billion as against the projection of Rs 341.6 billion. For the current budgeted year the FBR has estimated Rs 375 billion sales tax collection.
Last year overall indirect taxes performance was not good enough as the tax machinery mounted up Rs 519 billion against the projection of Rs 569 billion. But the direct taxes collection remained impressive. The collection stood at Rs 320.6 billion against projection of Rs 272 billion.
Sales tax is consumption based tax, levied on manufacturers and retailers with an annual turnover of more than Rs five million, as well as on importers, wholesalers, distributors, dealers and specified services at rate of 15 per cent.
With an ambition of achieving Rs 1025 billion revenue target against all odds, the authorities will have to revisit the composition of direct and indirect taxes. They are already heavily dependent on indirect taxes where the ratio is almost 60 per cent of the total taxes.
Courtesy: The Nation
Islamabad (Shahbaz Rana): After dismal performance in direct taxes during first half-year, the tax authorities are contemplating to levy additional indirect taxes aimed to recover revenue shortfall and meet annual target of Rs 1025 billion.
Reliable sources in FBR Headquarters said that Federal Board of Revenue is considering three different proposals to levy sales tax primarily to bridge the gap of Rs 35 billion that occurred due to less than expectations performance in direct taxes.
President Pervez Musharraf has recently given green signal to economic managers to take all appropriate measures, including levying of additional taxes and cuts on expenditure to remain on course. Reportedly the Presidency had declined any move to revise annual economic indicators rather it asked to unearth the hidden potential.
In addition, the authorities have also asked the Direct Tax wing to improve its performance in Withholding Tax (WHT) collection that, according to the sources, the relevant authorities failed to do so.
In last quarterly conference, the FBR marked a number of sectors where non-deduction of WHT was occurring only because of ineffective monitoring and mismatching of the information being received form different quarters. The authorities also decided to re-check the list of withholding agents.
The FBR has suffered a revenue shortfall of Rs 35 billion during July-December as against its revised revenue target. The major setback was in direct taxes. The tax bosses estimated a loss of about Rs 28 billion only in less collection on income tax and corporate tax returns.
The nominal revenue collection on rental income from the properties is another source of tension for the administration. The tax bosses have to carefully devise new strategy of imposing sales tax on some new or even existing tapped sectors.
The performance in this head was not so admirable during the last fiscal year when the tax authorities accumulated Rs 311 billion as against the projection of Rs 341.6 billion. For the current budgeted year the FBR has estimated Rs 375 billion sales tax collection.
Last year overall indirect taxes performance was not good enough as the tax machinery mounted up Rs 519 billion against the projection of Rs 569 billion. But the direct taxes collection remained impressive. The collection stood at Rs 320.6 billion against projection of Rs 272 billion.
Sales tax is consumption based tax, levied on manufacturers and retailers with an annual turnover of more than Rs five million, as well as on importers, wholesalers, distributors, dealers and specified services at rate of 15 per cent.
With an ambition of achieving Rs 1025 billion revenue target against all odds, the authorities will have to revisit the composition of direct and indirect taxes. They are already heavily dependent on indirect taxes where the ratio is almost 60 per cent of the total taxes.
Courtesy: The Nation
