FBR collects Rs459 billion as sales tax on POL products in TY 2022

FBR collects Rs459 billion as sales tax on POL products in TY 2022

The Federal Board of Revenue (FBR) has reported a substantial growth in sales tax collection on the import of Petroleum, Oil, and Lubricants (POL) products during the tax year 2022, reaching an impressive Rs459 billion.

This marks an 80% increase compared to the collection of Rs255.74 billion in the preceding tax year, as revealed by the FBR’s annual report.

Sales tax on imports holds significant importance in federal tax receipts, contributing substantially to the overall revenue. The net collection of sales tax on imports during the fiscal year 2021-2022 reached Rs1,741 billion, showcasing a remarkable growth of 56% from Rs1,115.9 billion in the fiscal year 2020-2021.

The top 10 commodities in sales tax imports played a pivotal role, contributing 75.6% to the overall sales tax on imports collection. Notably, petroleum emerged as the primary source of sales tax collection at the import stage, constituting 26.4% of the total sales tax imports. The FBR disclosed that the collection from petroleum products during FY 2021-22 stood at around Rs459 billion, compared to Rs255.7 billion in FY 2020-21, reflecting an impressive growth of 79.5%. The surge is attributed to the upward trend in global prices of petroleum products.

The foundation of sales tax on imports collection is rooted in the import value, and a closer look at the import value of major items reveals a well-aligned growth trend. In FY 2021-2022, the total import value surged by 58.8%, and the collection of sales tax at the import stage experienced a commendable growth of 56%.

The FBR’s report underscores the positive correlation between the increase in import values and the growth in sales tax collections on POL products. The surge in global prices of petroleum products has not only contributed to enhanced revenue collection but has also played a vital role in sustaining the overall economic growth witnessed in the country.

As the FBR continues to navigate through evolving economic landscapes, the significant boost in sales tax collections on POL product imports stands as a testament to the resilience of the tax system and its adaptability to external market dynamics. The positive fiscal outcome is expected to further contribute to the government’s efforts in achieving sustainable economic development and meeting the revenue targets set for the fiscal year.

The FBR’s proactive approach in aligning tax policies with economic trends showcases its commitment to optimizing revenue potential while fostering an environment conducive to business and economic growth. The impressive sales tax collection figures on POL product imports affirm the effectiveness of the taxation system in responding to the challenges and opportunities presented by the global economic landscape.