KARACHI: The Large Taxpayers Office (LTO) Karachi, a key arm of the Federal Board of Revenue (FBR), has achieved an unprecedented 112% year-on-year growth in the collection of direct taxes in February 2024.
Official figures reveal that the LTO Karachi collected Rs 95 billion during the month, marking a substantial increase from the Rs 45 billion collected in the corresponding month of the previous year.
While this remarkable performance in direct tax collection is commendable, it was partially offset by a modest 4% growth in the collection of sales tax during the same period. The tax office reported a collection of Rs 79 billion in February 2024, compared to Rs 75.50 billion in the corresponding month of the previous year. However, the collection of federal excise duty witnessed a significant 57% growth, reaching Rs 13 billion in February 2024, up from Rs 8.25 billion in the same month of the previous year.
The cumulative effect of these collections brought the total net tax collection for February 2024 to Rs 186.52 billion, a substantial increase from the Rs 128.60 billion recorded in the same month of the previous year.
Despite the exceptional growth in revenue collection, February 2024 presented challenges with a lower number of days and disruptions caused by public holidays and general elections. Nevertheless, the LTO Karachi managed to deliver outstanding results.
Interestingly, alongside the impressive revenue collection, the LTO Karachi disbursed a considerable amount in tax refunds. In February 2024, income tax refunds amounted to Rs 5.53 billion, reflecting a staggering 1527% increase from the same month in the previous year. Sales tax refunds also saw a significant rise, reaching Rs 6.3 billion, a 49% increase compared to February 2023.
Looking at the first eight months (July – February) of fiscal year 2023-24, the LTO Karachi demonstrated a 28% growth in overall collection, reaching Rs 1.57 trillion compared to Rs 1.23 trillion in the corresponding period of the previous fiscal year.
Direct tax collection maintained a robust 49% growth during the first eight months of the current fiscal year, totaling Rs 840 billion, compared to Rs 564 billion in the same months of the previous fiscal year. However, sales tax collection grew at a more modest rate, recording a 6% increase to Rs 645 billion compared to Rs 608 billion in the same period of the last fiscal year.
Despite the government’s efforts to stimulate business activities by releasing substantial tax refunds in the first eight months of the current fiscal year, the growth in sales tax collection remained restrained. This could be attributed to challenging economic conditions and a significant decline in imports. LTO Karachi reported only a 2% growth in sales tax collection at the import stage, while sales tax on domestic supplies saw a more substantial increase of 22% during the same period.
