ISLAMABAD: The Federal Board of Revenue (FBR) has successfully enhanced the overall share of the direct taxes in the total revenue collection in last three years. This achievement has been made as per policy shift to reduce the dependence on the indirect taxation.
The share of revenue collected through direct taxes was 38.91% in the total revenue collection of Rs2254.6 billion in the fiscal year 2013-14. This share increased to 39.99% in total revenue collection of Rs 589.90 billion in 2014-15. This increased ratio was despite the higher tune of total revenue collection.
The share of revenue collected through direct taxes slightly lowered to 39.91% further in fiscal year 2015-16 despite the fact that tune of total revenue collection soared up to Rs 3112.47 billion.
Similarly, the percentage of indirect taxes in the total revenue collection lowered from 61.09% in fiscal year 2013-14 to 60.01% in fiscal year 2014-15 and then remained 60.09% in previous fiscal year. This decrease was despite the fact that total tune of revenue collection witnessed a surge in last two financial years.
A well placed official source at FBR told Customs Today that traditionally the customs duty constituted a major component of overall revenue collected by the tax authority, but the share of customs duty, an indirect tax, had been reduced from 19% to 13% from 2005-06 to 2015-16 indicating a shift towards direct taxation.
In this regard, FBR has taken a number of measures to reduce the size and share of indirect taxes in the total revenue collection including the reduction of maximum rate of customs duty from 30% to 20%, with the exception of auto sector and alcoholic beverages as well as decrease in the number of slabs from 7 to 4 i.e. 3%, 11%, 16% and 20%.
In the Budget 2015-16, the source said that out of total Rs. 238 billion budgetary revenue measures only Rs. 42 billion were customs related in comparison with Rs. 142 billion Income Tax (direct taxes) measures.
Similarly, in budget 2016-17, the source added that the share of CD in budgetary measures was only Rs.11.4 billion out of a total of more than Rs. 148 billion measures, while the share of Income Tax (Direct Tax) was Rs. 115.5 billion. Moreover, customs duty on more than 2000 items was reduced from 5% to 3% to provide incentive and relief to the industrial sector of the country in current budget
