Karachi, November 28, 2023 – The collection of sales tax during the fiscal year 2022-23 exhibited marginal growth of 2.3 percent, reaching Rs. 2,591 billion, despite an increase in the uniform sales tax rate to 18 percent.
This amount is Rs. 59 billion higher than the Rs. 2,532 billion collected in the previous fiscal year.
This was revealed by the Federal Board of Revenue (FBR) in the yearbook released on Tuesday.
Sales tax contributed approximately 36.2 percent to the total revenue collection during FY2022-23. The increase in the sales tax rate to 18 percent (and 25 percent for certain luxury items) aimed to bolster revenue, but the overall economic slowdown and fiscal stabilization measures resulted in a growth rate of only 2.3 percent.
It is noteworthy that sales tax at the import stage, accounting for more than 61 percent of the overall sales tax collection, experienced a 7 percent negative growth. This decline is attributed to a 5.1 percent decrease in imports, impacting the overall sales tax collection. Despite these challenges, the sales tax target was met to the extent of 92.3 percent.
Sales Tax Domestic (STD) Collection: The net collection of Sales Tax Domestic (STD) stood at Rs. 975.1 billion, reflecting a substantial increase of 23.2 percent from the Rs. 791.5 billion in the previous fiscal year. Major revenue contributors in this category included electrical energy, petroleum products, sugar, cement, natural gas, cigarettes, aerated water/beverages, etc.
Major Heads of Sales Tax Domestic:
• Electrical Energy: 17.8% share, growth of 49.3%
• Pol Products: 12.1% share, growth of 41.9%
• Sugar: 6.1% share, growth of 16.8%
• Natural Gas: 3.8% share, growth of 28.7%
• Cotton Yarn: 3.7% share, negative growth of 25.9%
• Cement: 3.3% share, growth of 16.2%
• Cigarettes: 2.9% share, growth of 17.6%
• Aerated Waters/Beverages: 1.5% share, growth of 13.9%
• Tea: 1.4% share, growth of 41%
• Concentrates Used In Beverages/Foods: 1.3% share, growth of 52.6%
These top 10 sectors contributed around 54 percent to the sales tax domestic collection.
Sales Tax Collection at Import Stage (STM): Sales tax on imports (STM) witnessed a negative growth of (7.2 percent), with a net collection of Rs. 1,616 billion compared to Rs. 1,741 billion in the previous fiscal year.
Major Heads of Sales Tax at Import Stage:
• POL Products: 18% share, negative growth of 38.7%
• Edible Oil: 10.2% share, growth of 44.2%
• Iron and Steel: 7.8% share, negative growth of 13.5%
• Machinery & Mechanical Appliances: 6.6% share, negative growth of 19.9%
• Plastic Resins etc.: 6.4% share, 0.8% growth
• Vehicles (Non-Railway): 4.7% share, negative growth of 46.7%
• Organic Chemicals: 4.6% share, negative growth of 3.4%
• Electrical Machinery: 3.9% share, negative growth of 30.8%
• Oil Seeds and Oleaginous Fruit; Misc: 2.7% share, negative growth of 11.7%
• Coffee, tea, mate, and spices: 1.9% share, negative growth of 8.2%
These top 10 commodities contributed around 67 percent to the sales tax imports collection.
The alignment of sales tax collection with the growth trend in imports underscores the impact of economic dynamics on revenue streams. The challenges and opportunities in these sectors will likely shape future fiscal strategies to ensure sustained revenue growth.
