WHT accounts for 65pc of Rs275bn IT collection

[Muhammad Omar]

Income tax collection grew by 22pc to Rs275.4 billion during the quarter from Rs233.2bn a year earlier. Photo courtesy Federal Board of Revenue, Government of Pakistan


ISLAMABAD: The easy-to-collect withholding tax continued to be the leading source (65 per cent) of the ‘income tax’ receipts during the first quarter (July-Sept) of this fiscal year, the Federal Board of Revenue (FBR) said on Monday.

Income tax collection grew by 22pc to Rs275.4 billion during the quarter from Rs233.2bn a year earlier.

The robust growth in WHT came mainly on the back of increase in its rate during the 2014-15 budget.

By contrast, the revenue collection on demand, which involves efforts of tax officials, declined by 12pc during the period. However, an 11pc increase was witnessed in the recovery of past arrears.

The third component of direct taxes is voluntary payments which include advance tax payments and payments with returns. The advance tax payment rose 10.3pc to Rs118.510bn during July-Sept from Rs107.402bn last year.

The amount of tax received with returns was Rs14.942bn during the period compared with Rs10.084bn a year ago, an increase of 48.2pc.

Nine major taxes accounted for around 88pc of the total WHT revenue. The highest growth in withholding tax collection was seen in electricity (51pc), followed by cash withdrawal (26pc), salary (25.5pc), contracts (24.6pc), bank interests (24.3pc), imports (16.6pc), dividends (8pc), salaries (25.5pc) and exports (4.5pc). On the other hand, collection from telephone declined by 8.6pc during period.

Despite WHT’s growing contribution over time, there is ample proof that withholding agents are not depositing the actual amount they deducted at source from the taxpayers. Many such cases were recently detected by the tax authorities.