Karachi, August 22, 2023 – Pakistan has achieved a significant milestone by collecting a total of Rs 417 billion as sales tax on services during the fiscal year 2022-23, as disclosed by official documents on Tuesday.
The data, released by the federal finance ministry, reveals an impressive surge of 17.23 percent in the collection of sales tax on services compared to the previous fiscal year, where the collection amounted to Rs 355.72 billion.
In Pakistan, all four provinces are tasked with the responsibility of collecting sales tax on services. The fiscal year 2022-23 was marked by numerous challenges, and the notable increase in collection can be attributed to the depreciation of the Pakistani Rupee (PKR) against the dollar and a substantial rise in inflation.
Despite the increase in tax collection, the sales tax collection as a percentage of GDP saw a marginal decline. It fell to 0.49 percent during the fiscal year 2022-23, compared to 0.53 percent in the preceding fiscal year.
Among the provinces, Punjab emerged as the leader in the collection of sales tax on services. The province collected a substantial Rs 197 billion during the fiscal year 2022-23, marking a notable increase of 19.40 percent compared to the Rs 165 billion collected in the previous fiscal year.
Sindh, not far behind, registered a commendable growth of 19.30 percent, collecting Rs 174 billion in the fiscal year 2022-23, compared to Rs 145.80 billion in the preceding fiscal year. However, the Sindh province, in a press release, claimed to have collected Rs 185.3 billion during the fiscal year under review.
Balochistan also exhibited a commendable performance by collecting Rs 19 billion as sales tax on services during the fiscal year 2022-23, showcasing an increase of 9.51 percent from the Rs 17.35 billion collected in the preceding fiscal year.
In contrast, Khyber Pakhtunkhwa experienced a minor setback in the collection of sales tax on services. The province’s collection slipped by 1.71 percent to Rs 27 billion during the fiscal year 2022-23, compared to Rs 27.47 billion in the preceding fiscal year.
The increase in sales tax collection, particularly in Punjab and Sindh, signifies the government’s efforts to boost revenue amid economic challenges. As Pakistan continues to navigate the economic landscape, these tax revenues play a crucial role in sustaining government operations and funding essential services.