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Income tax collection from exports falls 12pc to Rs1.6 billion in Q1

Business

October 20, 2020

KARACHI: Collection of income tax on exports declined 12 percent during the first quarter of the current fiscal year of 2020/21 as laggard outbound shipments were further affected by lockdowns related to coronavirus, sources said on Monday.

The Federal Board of Revenue’s (FBR) income tax collection from exports fell to Rs1.55 billion during the first quarter of the current fiscal year as compared with Rs1.77 billion in the corresponding period of the last fiscal year.

Officials at Large Taxpayers Office (LTO) Karachi said the tax collection under the head of export witnessed decline due to lower export receipts following falling demand in the international markets.

The officials further said the torrential rains in Karachi by end of August also affected the clearance of export consignments. Besides, holidays during the same months hampered the communication for transporting export goods.

The exports of the country witnessed decline of around one percent to $5.47 billion during the first quarter of the current fiscal year as compared with $5.51 billion in the corresponding quarter of the last year.

Exports showed first recovery in July after consecutive downtrends since March amid coronavirus lockdown. Ease in lockdown paved way for clearance of orders stuck on ports. Pakistan’s economy that was already tottering before the coronavirus was further mauled by monthslong lockdown. The growth is expected to recover at 1 to 1.5 percent this fiscal year after contraction in the previous fiscal year.

Exports continued to show contraction since the government took charge. Trade deficit narrowed 27.1 percent to $23.1 billion in the last fiscal year of 2019/20, but the reduction was mainly caused by suppressing imports rather than export sector’s recovery.

Exports declined 6.8 percent to $21.3 billion, whereas imports sharply fell 18.6 percent to $44.5 billion during the last fiscal year. The LTO sources said the tax collection under the head improved in September due to recovery in exports after lifting of the lockdown.

The collection was Rs647 million in the month of September as compared with Rs576 million in the same month of the last year. The FBR collects one percent income tax the total amount of export receipts under Section 154 of Income Tax Ordinance, 2001.

Banks collect taxes on behalf of the FBR from exporters at the time of export receipts are remitted into Pakistan.