Karachi, November 28, 2023 – The Federal Board of Revenue (FBR) has revealed in its fiscal year 2022-23 yearbook that direct taxes emerged as the leading contributor to total revenue collection, accounting for an impressive 46 percent share.
According to the yearbook released on Tuesday, the FBR reported a net collection of Rs. 3,271 billion under the direct taxes category, reflecting a substantial growth of 43.2 percent compared to the previous financial year’s collection of Rs. 2,284.9 billion. Additionally, Rs. 17.3 billion has been disbursed as refunds to claimants during the fiscal year.
The direct taxes category encompasses Income Tax, Workers Welfare Fund/Workers Profit Participation Fund, and the Capital Value Tax. The breakdown under “Income Tax” includes taxes collected through withholding, advance tax, payments with returns, and collection on demand.
Collection on Demand (CoD):
Efforts to enhance collection from outstanding Income Tax demand resulted in an overall collection of Rs. 144.3 billion during FY2022-23, a 20.2 percent growth compared to the Rs. 120.0 billion collected in the previous financial year. The growth in this segment was mainly driven by a substantial increase of 66.8 percent in current demand, although arrear demand experienced a significant decline of 91.9 percent.
Advance Tax:
Major contributions came from advance tax collection, reaching Rs. 945.3 billion compared to Rs. 569.3 billion in FY2021-22, marking a robust growth of 66 percent.
Payments with Returns:
This component, including payments made at the time of submitting annual Income Tax Returns, saw a collection of Rs. 122 billion during FY2022-23, a notable increase of 52.7 percent from the Rs. 79.9 billion in the previous fiscal year.
Withholding Tax (WHT) Collection:
The WHT collection during FY2022-23 reached Rs. 1,874.2 billion, a growth of 32.2 percent from the Rs. 1,417.5 billion in the previous fiscal year. Notably, all major items of WHT recorded positive growth. WHT from the sale of immovable property exhibited the highest growth at around 340.5 percent, followed by growth in Profit on Debt/Bank Interest & Securities (106.7 percent), salary (40.1 percent), and electricity (38.0 percent).
The highest contributor in withholding taxes is the withholding tax on contract payments, holding a 21 percent share, followed by Profit on Debt/Bank Interest & Securities (17 percent), imports (15 percent), and salary (14 percent).
Direct taxes, with their substantial contribution and growth, underline their significance in the revenue collection landscape. The FBR’s effective strategies in enhancing tax compliance and optimizing various tax categories have played a pivotal role in achieving these notable results.
